Last week, a landmark case in Scotland highlighted the need for deposit protection, after a letting agent in North Ayrshire became the first in the country to be sanctioned for breaching rules that secure the deposits of their tenants.
The agent, Colvin Houston Ltd., pleaded guilty to the charge relating to two specific deposits that had not been paid into a scheme. The deposits amounted to £925, and the company was subsequently fined £750. This fine was then reduced to £500 for an early plea.
North Ayrshire Council said the landmark ruling at Kilmarnock Sheriff Court could potentially have a “massive impact” for people renting properties across Scotland. Furthermore, the Council stated that there now could be a legal precedent for establishing criminal liability under Trading Standards legislation, thus increasing the penalty for anyone found to be holding deposits without a regulated scheme.
It was the first time a letting agent has been prosecuted since the Tenancy Deposit Schemes (Scotland) Regulations 2011 was introduced five years ago.
The legislation was set up to ensure deposits were protected in independent tenancy deposit schemes operated by third parties until they were due to be repaid.
For more information on tenancy deposit protection:
Landlords - click here.
Tenants – click here.
Agents - click here.
These schemes were established to stop tenants from losing deposits unfairly - but until last week had never been used against letting agents.
Jen Paice, chief executive of SafeDeposits Scotland, said: “The majority of landlords and letting agents act responsibly by using the Scottish government-backed tenancy deposit scheme, however this case raises an important point which all landlords need to be cognisant of.
“The statutory duty to protect a deposit is on the landlord even when a letting agent is used so it’s essential to seek confirmation that this is happening and alert the authorities where it is not. SafeDeposits Scotland manages the majority of private rental deposits in Scotland and, as the only body to be based locally, we hear first-hand about the success and benefits of the scheme in providing assurance for tenants and landlords alike.
“We greatly value Trading Standards in North Ayrshire Council's work in bringing this case to court and hope that it will go a long way to ensuring the minority of letting agents and landlords who don’t currently comply with government regulations quickly address this.”
Housing legislation primarily places the responsibility for securing deposits on landlords. However, Consumer Protection legislation was used on this occasion, a first, to hold a letting agent responsible for the deposits they took on behalf of their landlords.
Scott McKenzie at North Ayrshire Council commented: “This is a very good example of how services within local authorities can work together to find answers to problems that cause real harm within communities
“Renters are disadvantaged and may find it hard to move into a new property because the whereabouts of their initial deposit is unknown.
“Trading Standards will continue to work more closely with our colleagues in Housing and Licensing, to ensure all rent deposits are in secure schemes. We are now sharing our experience with all other Councils in Scotland.”