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New Rules for Private Landlords
Private landlords who rent out residential property either by themselves or via a letting agency are now subject to new rules pertaining to deposits paid by an incoming tenant.
Historically deposits have been taken by a landlord at the beginning of a residential tenancy to provide a fund held by the landlord for the life of the tenancy and which could be used if , eg, a tenant fell into arrears with their rent or at the end of a tenancy to pay for the cleaning of the property if it is not returned in an appropriate condition to the landlord.
Unfortunately unscrupulous landlords have often failed to return deposits to tenants at the end of a tenancy often citing spurious reasons as to why the funds cannot be released.
Hopefully with the coming into force of The Tenancy Deposit Schemes (Scotland) Regulations 2011 tenants’ deposits will now be better protected.
In terms of same landlords will now be compelled to pay all deposits into an approved scheme rather than holding the funds themselves.
Landlords will now be obliged to pay the deposit into an approved scheme & provide the tenant with details of same within 30 days of the commencement of a tenancy.
Deposits held for existing tenancies will also be subject to the new Rules and landlords will have to move deposits they hold for tenants into an approved scheme within a specified timescale depending on the start and end dates of each tenancy. Consequently landlords who have a number of properties rented out may therefore have to find quite large sums of money to pay to an approved scheme.
At the end of a tenancy, the tenant will make application to the scheme for the return of the deposit. The scheme has to consult the landlord and seek their agreement to the release of the funds.
If there is no dispute then the deposit is simply repaid to the tenant. If there is a dispute, then depending on the nature of the dispute then either the whole deposit will be retained until the dispute is resolved or if the dispute is over a specified and quantifiable matter then a partial refund can be made to the tenant with the remainder of the deposit being retained by the scheme until the dispute is resolved.
Each scheme must also make available a dispute resolution mechanism which is to be provided free of charge to both landlord and tenant. In terms of same an adjudicator , independent of both landlord and tenant, must decide on the dispute within 20 days of receiving the referral.
Landlords who fail to comply with their duties regarding deposits in terms of the Rules face financial sanctions that can be ordered by a sheriff.
The creation of accurate tenancy agreements properly addressing the issue of the tenancy deposit is consequently crucial.
These new Rules are in addition to the existing requirements that all private landlords must register with their local authority that they are a “fit and proper person” to let property. It is an offence to let any house without being registered and from 31st August 2011 the maximum fine for operating as an unregistered landlord increased to £50,000.
In addition also from 31st August 2011 local authorities now have the power to require a criminal record certificate if it deems it necessary when applying the fit and proper person test. Any failure to provide this can lead to the landlord being removed from the register.
It is also now an offence if a landlord appoints an agent and does not notify the local authority of this. This will be punishable by a fine of up to £1000.
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