The Tenancy Deposit Scheme 1st May 2016

The Tenancy Deposit Schemes (Scotland) Regulations were introduced in Scotland in March 2011, in order to safe guard tenants’ deposits from rogue landlords who frequently kept deposits at the end of a tenancy; and in order to protect landlords against non-payment of rent, or other costs at the end of a tenancy such as damage to the property, cleaning costs etc. The Key Place lodges all deposits with SafeDeposits Scotland, which is the only not for profit scheme based in Scotland.

At the end of the tenancy, in the majority of cases, there is no dispute. However sometimes there is disagreement between the landlord/agent and the tenant, and in these cases tenancy deposit schemes aim to resolve deposit disputes as efficiently as possible. Therefore it is essential that landlords are able to fully evidence the state, condition and cleanliness of their property at the start and end of every tenancy.

Recent research has revealed that deposit disputes are at their highest level since records began, seven years ago. Tenants are more aware of the Tenancy Deposit Scheme and how it works, and so this trend is likely to continue. Cleaning is the most common reason for going to dispute (comprising 58% of all deposit disputes), and there has been a 50% rise in this over the last 5 years. The second most common cause of disputes is damage to property (52%), followed by redecoration (32%), gardening (17%) and rent arrears (10%). Interestingly money owed in rent arrears has risen over recent years, however it remains the lowest disputed incident as it is very easy to evidence at adjudication.

These statistics are very concerning and landlords need to sit up and listen. It is vital that a detailed, comprehensive inventory is produced at the start of every tenancy in order to evidence the condition of the property at check-in. This can then be referred to at check-out in order to identify any issues that have arisen as a result of the tenancy. Landlords (or letting agents on the landlord’s behalf) can use this to try and claim money back from the tenant’s deposit through the deposit scheme. For further information on inventories see accompanying newsletter article.

Disputes also frequently centre around wear and tear. For example, has the carpet been left stained and dirty by the tenants or is it just worn due to use over a number of years? There is a general understanding that a tenant cannot be held responsible for damage at the end of a tenancy caused by ‘reasonable use of the premises and the ordinary operation of natural forces’. A tenant is expected to return a property in the same condition at the end of the tenancy as found at the start of the tenancy, allowing for fair wear and tear. The law does not allow for betterment, or ‘new` for ‘old` - landlords are not entitled to be compensated so that the property can be improved at the tenant’s expense. The landlord may be entitled to some costs if there is damage, however the cost of replacement may not be down to the tenant in full, as deductions must be reasonable and proportionate to the damage attributable to the tenant which is in ‘excess of fair wear and tear’.

An example of this would be damage to a carpet. The cost of a new similar replacement is £500, however the actual carpet is 2 years old. The average lifespan of a carpet is 10 years old, and therefore the residual lifespan is 8 years. The depreciation of the carpet is worked out as the cost of the new replacement (£500) divided by the average lifespan (10 years) which equals £50 per year. The reasonable apportionment cost to the tenant is therefore the residual lifespan (8 years) times this £50, which is £400.

Letting agents act as an intermediary between tenant and landlord, helping to resolve any disputes before they get out of hand. Disputes are common, and are on the increase. Landlords who use a letting agent can sit back and relax, knowing that the letting agent is dealing with all of this for them.