This Wednesday was the deadline for all Scottish private landlords to place their tenants’ deposits in a registered scheme.
In England and Wales all landlords have had to register their deposits in a scheme for a number of years now as deposits are extremely important to both tenants and landlords, as for tenants it secures them their property, while for landlords it protects their business.
Here we look at the basics of deposits and why protection schemes have been put into place throughout the UK:
Taking a Deposit
After spending a large amount of your time marketing your property and attending viewings with potential tenants you will eventually find one that will want to rent the property from you. At this point you need to run background checks on your tenants to make sure they are financially stable and upstanding members of society; however this doesn’t guarantee that your tenant will look after your property or not fall into rent arrears!
This is one of the main reasons you need to take a deposit, as it means that if your tenant does cause damages or miss a rent payment you have some of their money to cover the costs and you don’t have to rely solely on your landlord insurance. For the tenant, a deposit guarantees that the house is theirs for the period agreed and you can’t let it out to someone else before they move in!
Deposit Protection Schemes
Deposit protection schemes were created in order to solve disputes between tenants and landlords and to make sure that unscrupulous landlords don’t spend a tenant’s deposit during their tenancy. By law, all landlords must place a deposit into a registered deposit protection scheme within thirty days of receiving it. Furthermore, landlords must also notify the tenant of which deposit scheme they have chosen and provide them a copy of the paperwork so if the tenant ever has a complaint they know who to contact.
Failure to comply with these regulations will lead to receiving a fine, which could be up to three times the amount of the original deposit amount, so make sure you don’t forget! If there is a dispute at the end of your tenancy concerning damages and whether you should keep your tenants’ deposit then the scheme you’re registered with will also look at your case and make a decision based on the evidence.
If you are still unsure about deposits, or want to know more about what registered protection schemes you can use then make sure you go online and visit the government’s website. It’s always better to be safe than sorry, especially so you don’t end up with a fine!