11 Jul 2014

Analysis of the Tenancy Deposit Scheme on its 2nd anniversary

Analysis of the Tenancy Deposit Scheme on its 2nd anniversary

Katy Neithercut, Property Factor, analyses the success of the Tenancy Deposit Scheme on its 2nd anniversary. 

Katy Neithercut, Property Factor, analyses the success of the Tenancy Deposit Scheme on its 2nd anniversary. 

When it was introduced a little over two years ago the Tenancy Deposit Scheme resulted in a steep increase in the Regulations governing the management of deposits in the Private Rented Sector (PRS). However, after some initial teething issues, my view is that the scheme has proven to be a great success for landlords and tenants alike.  

Since its introduction as part of the Tenancy Deposit Scheme (Scotland) Regulations 2011, any deposits received after the 2nd October 2012 were required to  be deposited with a Scheme within 30 working days of the tenancy starting (with any deposits received prior to this date having a transfer deadline of no later than the 15th May 2013). This significantly increased the protection available to tenants from unscrupulous landlords who often saw deposits as ‘bonus payments’ at the end of a lease.

In addition, an obligation was introduced which meant that at the time of the deposit being transferred a landlord is required to ensure that certain information is given to the tenant, including details about the amount of the deposit and the Scheme where it is held. If a deposit is not ‘paid in’ within the required timescales then the tenant may apply to court for certain sanctions against the landlord.  This offers significant ‘motivation’ to landlords to ensure they are compliant.

The deposit then remains in the Scheme’s nominated bank account until it is repaid in accordance with the Scheme Rules and the requirements of the Tenancy Deposit Schemes (Scotland) Regulations 2011 – another win for the tenant.

When the tenancy ends, both the tenant and landlord can submit a proposal for deposit repayment, at which point the scheme would then write to either party as appropriate and seek agreement to the proposal. 

Should both parties be unable to reach a mutually agreeable proposal the matter is passed to an independent Adjudicator and both parties are offered the opportunity to provide evidence in support of their claim. If a deposit repayment can be agreed before Adjudication then funds are transferred within 5 working days. However, in those cases were agreement cannot be met the process is considerably longer (with the evidence collection, decision making and the statutory review period taking around 75 working days from the point of the deposit being disputed). Whilst this can be a drawn out process it does offer both parties an independent and low cost form of alternative dispute resolution and must therefore be viewed as an improvement to the pre-Tenancy Deposit Scheme position.

The Tenancy Deposit Scheme has significantly improved the regulation of deposits for rented accommodation and offers both landlords and tenants peace of mind that was not previously available as regards dispute resolution. This is a positive move in a sector often hampered by regulation. 

Katy Neithercut, Property Factor


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