Scottish Landlords Pay into Tenancy Deposit Scheme

If you’re letting property in Scotland then by now you should know that the deadline to pay all tenant deposits received after March 7th 2012 into a Tenancy Deposit Protection Scheme (TPD) is Tuesday; that’s the 14th November. This is now enforced under Scottish law and failure to comply will lead to prosecution. So if you’re new to the TDP, what do you need to know?

Spreading the Risk with Third Parties

Imagine you’re going on holiday abroad. If your flights are cancelled, who can your turn to? Your airline may be the first port of call, but at the end of the day it will be your travel agent who arrange your compensation. The TDP works in exactly the same way, and by enforcing that money is held with an authorised third party, tenants have two places to go in the event of a dispute. As a landlord, your rent guarantee insurance provider provider gives you this option too.

The 30 Day Period

New tenant deposits, that’s anything received Wednesday in Scotland and anything new in the rest of the UK, must be paid into a TDP within 30 days of receiving the money. This is important to remember and does not necessarily constitute the beginning of the tenancy. If you are taking a deposit any more than 30 days in advance of your tenants moving in, as many student landlords do, you will need to pay the deposit into a TDP.

Ensuring Payment is Made

The law does not consider who physically makes or does not make payment, it is only interested in the deposit on a property. If, for example, guarantors pay your tenant’s deposit or the deposit is paid to agents, you need to be sure that deposit still ends up in a TDP. Almost all agencies will do this automatically but it is worth checking.

The new laws shouldn’t cause too many compliance issues for small scale landlords but it may be something of an administrative hiccup for larger property entrepreneurs. It’s also worth considering the cash-flow implications of this legislation if you’re letting in Scotland: maybe it’s time to look after the savings account for a while!