Deposits

A deposit is a sum of money paid to a landlord or an accommodation agency as security against, for example, damage to property, unpaid fuel or telephone bills, cleaning bills, or to pay for the removal of tenants' furniture after they've moved out. 

This content applies to Scotland

Maximum deposit

A deposit cannot be more than two months' rent. [1] If it is more than this, it will be considered a premium and is unlawful. [2]

The purpose of a deposit

A deposit should only cover a landlord’s security on what the tenant owes for:

  • gas bills

  • electricity bills

  • telephone bills

  • other domestic supply bills

  • damage to the house and its contents

  • unpaid rent. [3]

If the landlord requests a deposit to cover costs and charges not mentioned above, they could be considered an unlawful premium.

Paying a security deposit

A tenant who is asked to pay a security deposit by a landlord or accommodation agency should make sure that their landlord registers their deposit with an approved tenancy deposit scheme.

A tenant should also:

  • obtain an agreement on the deposit in writing (including what it may be used for)

  • receive a receipt for the amount paid

  • check the inventory of contents of the property s/he is renting, as well as their condition. It is advisable to take photographs of contents listed on the inventory as evidence of their existence and condition, since the tenant may be held responsible for any discrepancies and/or damage and may forfeit all or some of the money when the tenancy ends. If the landlord’s agency does not provide an inventory, the tenant should compile one her/himself and have it signed by a witness who does not share the accommodation with the tenant.

  • obtain a written agreement about the condition of the accommodation, for example with regards to the amount of cleaning required inside the property. This is to avoid the landlord attempting to withhold part of the deposit at the end of the tenancy, claiming payment for a large cleaning bill.

Getting help with paying for a deposit

People who have difficulty finding the money to pay a deposit may be able to receive help from a rent deposit/guarantee scheme, if there is one in their area. Some schemes pay a deposit in cash to the landlord. Others may provide a 'bond' to the landlord, which means that s/he will be recompensed, up to an agreed limit, in the event of suffering loss due to damage or non-payment of rent.

If a local authority is offering a rent deposit/guarantee scheme, the scheme may ensure that housing benefit claims in relation to the property are fast tracked. Some schemes will have a list of approved landlords who can offer accommodation. Schemes will have different eligibility criteria, for example some will have age restrictions, others may only accept people who have made homeless applications.

Deposits where there is a change of landlord

If there is a change of landlord during the tenancy, the security deposit does not transfer to the new landlord. This is because the contract still lies between the tenant and the named and defined landlord.

Where the deposit is registered in a tenancy deposit scheme, tenants should seek the return of their deposit from the scheme provider.

Getting a deposit returned

In the first instance make contact with the landlord and formally request that they return the deposit. If the client has not had any information from the landlord to show which scheme the deposit has been placed in the adviser should ask for this information at the same time. The Shelter Scotland Get Advice public website has information on Tenancy Deposit Schemes. This page has template letters which a client can use (or which can be adapted for use by an adviser on a client's behalf.)

At the end of the tenancy there may a slight delay in the return of the deposit so that the landlord can inspect the property and check any outstanding bills. It is reasonable for the landlord or her/his agent to make deductions to cover damage to property, furniture or fittings, missing items listed on the inventory, and outstanding rent or fuel bills.

It is not reasonable for the landlord or her/his agent to retain a deposit where the only damage to the property is as a result of the normal wear and tear of having someone live there. However, what constitutes normal wear and tear is often difficult to define. This is where the inventory of contents and their condition can often be useful, since it should provide details of what the property and its contents were like at the time the tenant took possession.

Where the deposit has been registered in a tenancy deposit scheme it will be returned from the tenancy deposit scheme provider at the end of the tenancy, rather than their landlord. Landlords are required to apply for the return of a tenant's deposit from the scheme provider as soon as is reasonably practicable after the tenancy has come to an end. If there are any disputes over the amount of deposit to be returned, each scheme provider offers a free-to-access dispute resolution service.

The page on tenancy deposit schemes has more information on how these schemes work in practice.

Deposits and resident landlords

If the deposit isn't covered by the tenancy deposit scheme regulations (for example if the deposit was paid to a resident landlord there is no requirement for the scheme to be used) and it's not returned, or there's a dispute, a tenant can take action against their landlord using the simple procedure.

Deposit in lieu of last month's rent

This course of action should be unnecessary unless the tenant has a landlord who is not required to have their deposit registered with a tenancy deposit scheme,

If the landlord has not guaranteed to return the security deposit at the end of the tenancy, or if the tenant believes there may be a dispute with the landlord over its return, the tenant may consider withholding rent up to the amount of the deposit before leaving the property.

Although expedient, this is not legal, and if the tenant decides to take this route s/he should keep the money in a specially created savings account in case the landlord decides to take court action. If court or tribunal action is taken, then it is unlikely that the tenant will lose out financially provided there is no evidence of unpaid bills, wilful damage etc, as the most likely outcome is that the court or tribunal will order the landlord to return the deposit and the tenant to return the rent.

If a tenant decides to take this course of action it's important that they are aware that there is the possibility that if a decree for money is awarded in their absence, this could affect their credit status.

Last updated: 29 July 2020

Footnotes

  • [1]

    s.90(3) Rent (Scotland) Act 1984 as amended by s.123 Housing (Scotland) Act 2006; s.27 Housing (Scotland) Act 1988

  • [2]

    s.82(1) Rent (Scotland) Act 1984; s.27 Housing (Scotland) Act 1988

  • [3]

    s.90(3) Rent (Scotland) Act 1984 as amended by s.123 Housing (Scotland) Act 2006; s.27 Housing (Scotland) Act 1988