Tenancy Deposit Scheme: review

Introduction

Background

In October 2016, the Minister for Local Government and Housing decided that as the schemes were approaching the end of the fifth year of operation, the time was right for a review of the three approved schemes and asked officials to make plans for this. The Minister agreed in November 2016 that officials would carry out an early review of the governance arrangements in place for each of the three tenancy deposit schemes.

A desk-top review of governance arrangements was carried out by the Scottish Government policy lead for tenancy deposit schemes with input from each of the three schemes.

This wider review implements some of the recommendations from the initial governance review and covers the period from July 2012 to June 2018. It includes general reflections from scheme administrators from start-up and early operations through to development of private rented sector reform and interaction with new legislation, as well as feedback from tenants and landlords who have experienced the schemes.

Policy objectives and implementation

The original objectives for bringing forward tenancy deposit regulations and approved tenancy deposit schemes were:

• to reduce the number of unfairly withheld tenancy deposits;
• ensure that deposits are safeguarded throughout the duration of the tenancy;
• ensure that deposits are returned quickly and fairly, particularly where there is a dispute over the return of the deposit, or proportion of it, to tenant or landlord.

The policy remains consistent with the broader objective of supporting the growth of a professional, high quality private rented sector that can be considered as a desirable and sustainable housing solution.

The following tenancy deposit schemes (the schemes) were established in July 2012:

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

All deposits must now be protected by one of the schemes within 30 working days of the beginning of the tenancy.

Policy developments

Monitoring of the schemes over the past five years has highlighted the previously unforeseen issue of unclaimed deposits. These deposits continue to be protected by the schemes and the Scottish Government is exploring how best to deal with this issue as part of this review.

The tenancy deposit regulatory framework may need to adjust to fit with recent private rented sector housing reforms including the new private residential tenancy, the new letting agents regime and the transfer of jurisdictions for tenancy deposit disputes from the sheriff court to the First-tier Tribunal Housing and Property Chamber. We need to ensure that the Tenancy Deposit Schemes (Scotland) Regulations 2011 (the regulations) continue to deliver a robust regulatory framework for the foreseeable future.

Legislative Background

Part 4, section 122 (4) of the Housing (Scotland) Act 2006, gives Scottish Ministers a power to approve a tenancy deposit scheme and obliges Ministers to review each scheme from time to time and gives them power, once they have done so, to ensure that any scheme is revised.

Ministers can also withdraw their approval of any scheme following a review. Sections 122 (1-4) apply to new schemes or schemes which have been subjected to a review. This means that during a review of a scheme, Ministers must also follow the publicise and consultation obligations in subsection (3), except where they think that the review is unlikely to have a significant adverse effect on anyone.

The Tenancy Deposit Schemes (Scotland) Regulations 2011 (the regulations) make provision about tenancy deposit schemes for the purposes of sections 120 to 122 of the Housing (Scotland) Act 2006. Such schemes are required to be approved by the Scottish Ministers and will safeguard tenancy deposits. The Regulations set conditions which schemes must meet before they will be approved and establish the regulatory framework for such schemes.

The review of the schemes will explore what aspects of the legislation and administration have been successful and reflect on what works well, and not so well.

Report structure

The first part of the report concerns feedback gained from the schemes themselves. The second part of the report details findings from the tenant and landlord surveys.