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Review of tenancy deposit scheme

Monday, 11th February, 2019

 The Scottish Government has released results from research with tenants, landlords and schemes as part of a review of the Tenancy Deposit Scheme in Scotland.

The aim of the review was to look at whether the introduction of the Tenancy Deposit Scheme (TDS) had resolved the issues it was intended to and assess if the current regulations are fair and fit for purpose. This included considering whether the TDS works well for all tenants and landlords, exploring why deposits are going unclaimed and looking at what should be done with the unclaimed monies.

The first part of the report concerns feedback gained from the three tenancy deposit schemes themselves via a written questionnaire. The second part of the report details findings from the online tenant and landlord surveys.

The tenant survey, comprising 71 questions was also advertised through various tenant networks to encourage response from particular groups. The landlord survey, comprising 79 questions was sent only to landlords that deal with the schemes themselves, and not to letting agents who may represent landlords.

The Scottish Government say that monitoring of the schemes over the past five years has highlighted the previously unforeseen issue of unclaimed deposits. Unclaimed deposits continue to be protected by the schemes and the Scottish Government is exploring options as to what should be done with this money. They found that the majority of unclaimed deposits came from students, especially overseas students. 

The majority of tenants who responded said that they had received information about the schemes mainly through their letting agent, followed by the scheme itself and less frequently by their landlord. Some tenants felt that they needed more information, particularly about what happens in case of a disagreement regarding the deposit, how the deposit will be returned and how to make a complaint. Disappointingly, only seven out of 10 tenants reported that their deposit was protected within 30 days of the start of the tenancy - the legal requirement set out under the The Tenancy Deposit Schemes (Scotland) Regulations 2011.

Almost eight out of 10 tenants received their deposit back on time and the majority received their deposit in full, with 67 per cent receiving their deposit back on time and in full, especially tenants in older households, tenants who did not use a letting agent and those whose tenancy ended before 2017.

The most common reason for deposit deductions was damage to the property, followed by rent arrears. Almost six out of 10 tenants who did not receive back their deposit in full and/or on time did not dispute it with the scheme, mainly because they already had enough information or they didn't think it would make any difference.

Longer-term landlords were asked their overall opinion about the schemes in 2012 - when the schemes were first introduced, and again in 2018. In 2012, four out of 10 landlords were positive towards the scheme, 34 per cent were neutral, while 21 per cent felt negative. In 2018, opinions were slightly more positive, but a quarter still felt negative towards the scheme.

Just over half of landlords would not object to unclaimed money being invested in improving the private rented sector.

Interestingly, Landlords were more likely than tenants to have used the dispute service of the scheme, but still the majority had not, mainly because they did not want to spend time/effort or because they had already agreed with the tenant.

As part of the landlords' survey, they were asked how much they knew about recent private renting sector changes. Awareness was generally low; four out of 10 knew a lot about the new private residential tenancy, but far fewer knew a lot about letting agent registration, letting agent code of practices or the First-Tier Tribunal for Scotland. Landlords owning more than one property tended to be more informed on the changes, as well as intentional and longer-term landlords.

Recent Zoopla research results showed a similar theme emerging with regard to legislation awareness among landlords compared to letting agents - for example, only 23 per cent of landlords were aware of the forthcoming ban on tenant fees, whereas 72 per cent awareness among agents. Similarly, only 23 per cent of landlords know that a ‘how to rent’ guide must be given to new tenants, compared to 60 per cent amongst agents.



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