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How do I bank a tenant’s deposit?

Tim Williamson
Tim Williamson

Unless you are in one of the exempt categories, of which there are very few, landlords cannot bank a tenant’s deposit into their own bank account.

This has been the case since 2012 following the passing of the Tenancy Deposit Schemes (Scotland) Regulations 2011.

Legally landlords must lodge a tenant’s deposit within 30 working days of a tenancy start date. They also must provide specific information about where the deposit is held, details of the landlord and their registration, the amount protected and when, the address the deposit covers, as well as the terms in the lease likely to be called on in a claim.

This prescribed information notice also must be issued within the 30-working day timeline to lodge the deposit. Getting evidence of proof of serving the notice is good practice in case you need to present it to the Tribunal.

Failure to lodge the deposit and issue the prescribed information can result in a penalty to the landlord of up to 3 x the deposit paid to the tenant. This is not a fine but is an encouragement to protect a tenant’s deposit.

Be aware that Tenancy deposit Schemes in Scotland are required to inform a tenant where a landlord exceeds the 30-day payment window. The Tenancy Deposit Schemes (Scotland) Amendment Regulations 2019¹ requires tenants be notified when the overrun happens, and again when the deposit is applied for.

Tenant organisations, Shelter and student organisations have been active in encouraging tenants to pursue landlords who miss the 30-day window, or do not protect the deposit at all. Shelter, for example provide template letters to confirm the landlord has breached the legislation and a link to the First-tier Tribunal for Scotland (Housing and Property Chamber) to start an action against the landlord under Rule 103².

There is no cost to the tenant and the Tribunal must judge in their favour. The tenant does not have to have left the property before they apply. Tenants have up to three months after leaving before they are time barred.

Landlords failing to protect tenant deposits has been a concern throughout the UK. In a report featured in Property Investor Today³ (3rd February 2020) highlighted an estimated 3.5 million deposits were protected in England, which equated to some £3.9 billion in value.

An English Housing Survey report estimated 4.6 million tenancies in the private rented sector in 2019. The article states “there are potentially 1.1 million tenancies that either have not had a deposit protected, do not have deposits, or are using deposit replacement products…… there could be as much as £1.2 billion in deposit monies that are not protected.”

In England the court system deals with tenancy disputes.
Compare this with Scotland and two surveys run by Safe Deposits Scotland.

In July 2019 Letting Agent Today4 looked at the Tribunal decisions on unprotected deposits and found over 200 landlords had been judged against. This resulted in £186,657 paid out to tenants, the equivalent of more than £900 per case.

The Scottish Housing News5 on the 9th January 2020 reported Safe Deposits Scotland’s latest findings. Now the total cases jumped to 290 resulting in £321,609 paid to tenants, averaging £1,109 per case.

The increase in awards could be harsher decisions against landlords to reflect the years since deposit protection became law, or the additional ninety cases were for higher value deposits. In any event tenants are not shy in making landlords pay when tenancy protection rules are broken.

The good news is in the article’s conclusion.

“While 290 cases may appear high, there are currently roughly 257,000 registered landlords in Scotland’s private rented sector, so instances of non-protection of deposits equate to around 0.1% of the market.”

Please do not be one of the 0.1% target tenants take to the Tribunal.

Banking a tenant’s deposit is easy to do, though you do need to transfer funds as none of the schemes accept cash payments.

In Scotland there are three approved Tenancy Deposit Schemes:

  • Safe Deposits Scotland
  • Letting Protection Service Scotland
  • MyDeposits Scotland

Key-Lets have always used Safe Deposit Scotland (SDS) since the introduction of the Act in 2012.

They are the only deposit scheme based in Scotland and are a not-for-profit organisation that protects 60% of Scotland’s tenant’s deposits. They are also nice people to talk to and know their stuff.

If any landlord wants more information on Tenancy Deposit Schemes or any other aspect of letting please give me a call on 01292 289289 or reach out to [email protected]. I and the team will be happy to help. Key-Lets registration is LARN1903012.


Call Tim on 01292 289289 or Email: [email protected]

We have a number of helpful videos on our YouTube channel.

You can message me through Linked In.

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