A compulsory scheme to safeguard millions of pounds in deposits paid by tenants renting properties in Scotland has been approved by Housing Minister Keith Brown.
Annually, tenancy deposits amount to over £74 million in the majority of the 273,000 households that make up the private rented sector in Scotland. It is estimated that up to 11,000 tenants have £3.6 million of their deposits wrongly withheld each year.
The first tenancy deposit scheme to be approved is the Letting Protection Service Scotland which also aims to protect the reputation of the majority of private rented sector landlords who act professionally and responsibly.
Once in place landlords or their agents must pay deposits to an approved scheme and provide key information about the tenancy, the deposit, and the scheme which is protecting it, to the tenant.
The scheme will be free for landlords and letting agents to participate in and will provide access to a free and independent dispute resolution service, where agreement over the return of a deposit cannot be agreed by the tenant and landlord.
Two further schemes are being considered with the intention of starting all three schemes, which will operate across Scotland from 02 July, 2012. In order to provide landlords time to prepare, the legal requirements to submit deposits into a scheme will come into effect from November this year.
'Up to 11,000 tenants annually have £3.6 million of their deposits wrongly withheld, which is why this government is taking action to ensure tenants receive a fair deal. It is important to stress that the majority of landlords act responsibly. This scheme is aimed at those landlords who continue to tarnish the image of the private rented sector,' said Brown.
The new regulations that allow the scheme to operate are also deliberately streamlined with the emphasis on creating a cost effective approach to safeguarding tenancy deposits,' he added.
It is crucial that those in the private rented sector don't fall foul of this legislation and take the appropriate steps to ensure that they are prepared for its introduction, according to Kevin Firth, director of The LPS Scotland.
Graeme Brown, director of Shelter Scotland, said that too many landlords are uncertain about the grounds on which they can legitimately withhold a deposit. 'The introduction of a compulsory scheme to safeguard deposits is a step in the right direction towards protecting tenants, landlords and agents,' he added.
Sue Hopson, brand standards Director at lettings agent Martin & Co pointed out that in the eyes of the consumer the rules will be so much easier to understand as every agent and landlord will be following the same rules, processes and timescales via a transparent custodial method.
SOURCE Propertywire