Tenancy deposit schemes
When a deposit is paid to a landlord or letting agency, the deposit must be registered with a tenancy deposit scheme and put into a separate bank account set up by the scheme provider until it’s returned. Three tenancy deposit schemes became operational for Scotland on 2 July 2012. If you're a tenant, please see our advice on tenancy deposit schemes for tenants.
When do I register the deposit?
Deposits have to be registered, with one of the three scheme providers, within 30 working days of the tenancy starting.
Which landlords need to register tenancy deposits?
The requirement to register deposits applies to all private landlords. Basically, if you are required to register as a landlord with a local authority then you need to comply with these regulations.
However, landlords of the following kinds of properties do not need to register deposits:
- lets to family members
- life rents, i.e. where a property is rented to someone for their whole life
- holiday homes
- properties used by religious organisations
- where care is provided with the accommodation, e.g. nursing homes and supported accommodation
- houses subject to management control orders due to antisocial behaviour
- agricultural and crofting tenancies
- resident landlords.
Who are the tenancy deposit scheme providers?
There are 3 tenancy deposit scheme providers for Scotland:
What information do I need to give the scheme provider?
You must provide the tenancy deposit scheme with the following information:
- your contact details
- your tenant’s contact details
- details of the tenancy and property to which the deposit relates.
What if I’m unhappy with my scheme provider?
If you’re unhappy with the scheme provider you're using, you have the option of putting the deposit into another scheme. The scheme provider itself can facilitate this transfer, or you can have the deposit returned to you, allowing you to make the transfer yourself.
What information do I need to give tenants about their deposit?
You must also give your tenants the following information within 30 working days:
- how much and when - the amount of the deposit and the date you received it
- the date - the deposit was paid into the tenancy deposit scheme
- the address - of the property to which the deposit relates
- that you are registered - a statement confirming that you're registered as a landlord with the local council in which the property is located
- which tenancy deposit scheme - the name and contact details of the tenancy deposit scheme provider used.
Also, you have to highlight the circumstances in which all, or part of the deposit, can be kept at the end of the tenancy, with reference to the terms of the tenancy agreement. One example might be if your tenants haven't paid their bills, so remind them about this when either they give you notice or you give them notice that you want the tenancy to end.
Getting a deposit returned from the scheme
Both landlord and tenants can apply for the return of a deposit.
Landlords must apply for the return of the deposit as soon as is reasonably practicable after the tenancy has ended. In the application it's important that you state the date the tenancy ended and the amount you think should be returned to yourself and your tenant.
Once the scheme provider receives the application they’ll ask your tenant whether they agree with the amount to be returned to them. Tenants must write back within 30 working days to confirm whether they agree or disagree. If your tenant disagrees they should inform the scheme provider of the amount they think should be returned to them. If they can't be contacted or don’t write back to the the scheme provider, their share of the deposit will stay in the scheme and you'll receive the share of the deposit you believe should be returned to you, within 30 working days.
What if a tenant applies for the return of a deposit?
Tenants can also apply for the return of a deposit. However, if you apply within 30 days of your tenant’s application, your application will progress instead of your tenant’s. Therefore it’s in your best interests to apply for the return of the deposit as soon as possible. This ensures that your application and not your tenant’s, is processed by the tenancy deposit scheme.
The same requirements and procedure applies to a tenant's application as they do to landlord's applications.
What if there is a dispute?
A free-to-access dispute resolution service will be offered by the tenancy deposit schemes. Evidence of why a deposit should be withheld would be useful to have. It’s not compulsory to use this in every dispute – you're still free to negotiate yourself. However, you’re required to use dispute resolution if it’s requested by a tenant.
If a landlord requests dispute resolution their tenant must agree to use dispute resolution. If they don’t agree to this within 30 working days, the deposit will be repaid in line with the landlord's recommendation.
Disputes will be determined by an independent adjudicator and during the dispute resolution process the scheme provider will hold onto the deposit until the dispute is resolved. If you and your tenant come to an agreement during this process, the scheme provider will repay the deposit once they’ve received confirmation of the agreement. Once the adjudicator has come to a decision they will notify the landlord, tenant and scheme provider. The scheme will then pay the deposit to each party after ten working days, subject to any review.
Where dispute resolution fails
If dispute resolution fails before a decision is made, the scheme provider will repay the deposit. The amount of the deposit that will be repaid depends on why the dispute resolution process came to an end:
- if you and your tenant came to an agreement, then the scheme will pay the agreed amounts to each party,
- if the dispute resolution came to an end for another reason, the deposit will be paid in line with your recommendation.
Can the adjudicator’s decision be reviewed?
You have ten working days after you've been notified of an adjudicator's decision to request a review. Both landlords and tenants can request a review. Decisions can only be reviewed once and only on the grounds that the adjudicator has erred in fact or law, or both. If a review is requested the adjudicator will ask the other party to put forward their views. If the request for a review is rejected, the deposit will be paid back to each party in line with the original decision as soon as reasonably practicable.
After the adjudicator has reviewed their decision they’ll inform both parties of the outcome and repay the deposit in line with this within 5 working days. This decision is final and can’t be challenged by you or your tenant.
What happens if I don’t use the tenancy deposit scheme?
If you don’t use a tenancy deposit scheme your tenant can apply to the sheriff court either during the tenancy or up to three months after it has come to an end. The court can order you to pay your tenant up to three times the amount of the deposit and to fulfil the requirements of the tenancy deposit scheme regulations.