Unclaimed tenancy deposits: equality impact assessment

Background

Since 2012, where a private landlord asks a tenant to pay a tenancy deposit, the deposit must be lodged with one of three independent approved tenancy deposit schemes. Monitoring of the schemes has highlighted the previously unforeseen issue of deposits remaining unclaimed some significant time after the tenancy has ended. Scottish Ministers now wish to address this issue and take the necessary steps to enable the use of the current unclaimed funds, reinvesting them to the benefit of tenants living in the PRS.

When a tenancy ends, a landlord or letting agent is required to arrange the return of the deposit minus any reasonable deductions. The landlord or letting agent should do this as soon as they can after the tenancy ends. Unclaimed tenancy deposits occur where the landlord has started the process to return the deposit (via an application to the deposit scheme provider), but the tenant does not respond and cannot be contacted.

A review of tenancy deposit schemes was carried out in 2018^[4], which explored this issue further. It found that the majority of unclaimed deposits belong to students, in particular overseas students who regularly return home without claiming their money back from the schemes. In addition, some of the larger unclaimed deposits relate to tenancies taken out by companies on behalf of their employees.

Despite work by each of the schemes to return unclaimed deposits, there is now around £4 million of unclaimed tenant deposit funds between the three approved deposit schemes.