A consultation into a Compulsory Tenant Deposit Scheme has been published this week by the Scottish Government, Clear Property Investment has learned.

Landlords are advised to look at the consultation paper which includes a copy of the draft regulations and a series of questions and answers. The consultation period is set to end on October 3 this year. After this date no further responses will be accepted.

For some time now the Scottish Government has been working with agents, landlords, tenants and other bodies interested in housing to look at how the practice can be implemented.

The reasons behind the scheme, according to the government, are threefold. To:

  • Improve the image and professionalism of the private rented sector
  • Safeguard deposits for tenants
  • Ensure deposit funds are available at the end of a tenancy

The Scottish Government say they will also consider a means of resolving disputes without the need for a landlord/tenant to initiate court proceedings.

If made law, the practice would bring Scotland in to line with England and Wales where the scheme has been in existence for the past two years. There, the scheme has exemptions for:

  • Resident landlords (those living in the property)
  • landlords of properties with rent of over £25,000 a year
  • Company lets
  • Student accommodation let directly by universities or colleges

Back in September last year Alex Neil, Minister for Housing and Communities, confirmed the Scottish Government were looking at the scheme. Since that time stakeholder groups in Scotland (as mentioned above) have been working on a possible framework. One of those groups is the charity Shelter Scotland whose director, Graeme Brown, said: "We want a transparent system for deposits that is fair to both tenants and landlords alike."

In England and Wales, several alternatives to implement the scheme are available to the landlord. These include agents holding the deposit for the landlord (this includes an admin charge of between £10 and £25), landlords registering with the Tenancy Deposit Solutions Ltd insurance-based scheme and paying an annual membership fee (the landlord has to pay every time a deposit is registered), and not using an agency at all. In the latter case this involves landlords asking for more rent upfront. This means, however, that there are no funds available to deduct money for damage to the property.

Findings of the Scottish consultation will be published in due course. In the meantime, landlords wishing to express their views, should do so now by referring to the Scottish Government's website where further detailed information can also be found.

Landlords with further questions should consult the Clear team at any of our offices in Scotland.

View other news from August 2010