We’ve had a few enquiries about articles in the press talking about tenancy deposits. Although there is provision in the Housing (Scotland) Act 2006 for a tenancy deposit scheme, the Scottish ministers need to decide on how this will be commenced and what form the scheme will take. No date for this has been set. For a glimpse of the shape of things to come, here’s what’s happened in England and Wales. TDS – The facts From 6 April 2007 anyone accepting a tenants’ deposit has to join a special scheme which will protect the deposit and provide a way of resolving disputes about the deposit at the end of the tenancy. The landlord/agent must provide the tenant with information about the authorised scheme protecting the deposit. If the landlord fails to comply he will lose the right under the Housing Act 1988 to serve notice for recovery of possession on termination of the shorthold tenancy. Why were these regulations being introduced? Deposit return is the largest cause of dispute at the end of a tenancy. This is a consumer protection measure designed to assist tenants when in dispute about the recovery of a deposit. There will be no additional costs to tenants arising from this initiative. How will the new regulations protect tenants’ deposits? Two types of scheme have been established for the protection of tenants’ deposits. The landlord or managing agent decides which scheme to join. • A single custodial scheme - where the deposit is held centrally (ie by the scheme, not by the landlord /agent). If there is a dispute at the end of the tenancy the scheme will refer the dispute to its dispute resolution service. An independent person will examine the facts and make a decision. • An insurance backed scheme – where the deposit is held by the landlord/agent. At the end of the tenancy if there is a dispute, the deposit is transferred by the landlord/agent to the scheme’s dispute service. An independent person will examine the facts and make a decision. In cases where a landlord refuses to pass the deposit to the scheme and the adjudicator finds in the tenant’s favour, the scheme has a fund which it will use to repay the tenant. The scheme will then pursue the landlord for reimbursement. What happens in circumstances where the landlord or tenant can’t be contacted at the end of the tenancy? If the tenant cannot be contacted the landlord can submit a single claim, indicating the reason for the claim together with evidence. Where a tenant makes a single claim, no further reasons/evidence are required as the deposit belongs to the tenant. Do the parties have to refer a dispute about the deposit to the alternative dispute mechanism administered by the deposit protection scheme? No. The parties can agree to refer the dispute to litigation if they wish. Anything else? Holding deposits should not be taken. Anything called a deposit must be subject to the tenancy scheme. Tenants should be given bills detailing what they are being charged for. Some landlords have said that they will no longer take deposits, especially in the case of unfurnished property. Landlords and letting agents could also use • Guarantors • Insurance • Rigorous tenant vetting • Credit cards The Scottish Association of Landlords is lobbying against the introduction of a scheme here. They feel that with landlord registration there is already too much regulation in the sector. For more information www.tds@gb.com
