According to reports produced by The Letting Protection Service England, the average English and Welsh property deposit is £100 more expensive than its Scottish equivalent.
Between June 2015 and May 2016, the average payment across Scotland was £794.11- that’s about 11.47% or an average of £102.89 lower than the £897 average for properties throughout Wales and England for the same period.
Edinburgh’s EH postcode recorded the costliest tenancy deposits in Scotland with an average of £908.44. This is more than twice the average for buy-to-let homes in Kirwall’s KW district, the cheapest in Scotland at £441.67.
In Aberdeen, deposits for properties was £860.39, at Kirkcaldy it was £794.11 and Falkirk recorded £744.21- all having average figures more than £700. The figure of the Outer Hebrides was much lower, having average deposits below £500.
In all of the UK, the properties within the Kingston-upon-Thames’ KT postcode attract the highest tenancy deposits; the average figure recorded was £1,715.25.
The location in England with the cheapest average was Liverpool, with an average deposit of £445, an amount only £3.33 dearer than Kirwall’s deposit.
Relief for Tenants
The report is welcome news for both tenants and landlords in Scotland, because if tenants have to pay lower deposits on their property, then it is less likely that they will default on their subsequent rent payments.
What’s more, if tenants know that deposits are quite low in these areas, it will help ensure that demand for rental homes is high. This high demand is responsible for helping landlords fill their properties and reducing lengthy property vacancy periods.
Tenancy Deposit Protection Scheme
Tenancy deposits are a very essential part of a rental process for parties on both sides of the contract. Landlords are expected to protect tenancy deposits- paid by a guaranteed short-hold renter- with government-backed protection schemes provided by their local authorities.
However, not all tenancy deposits must be protected. If a tenant lives in the same building as their landlord, or stays in the student residential accommodations, the deposit does not have to be protected by a tenancy deposit protection scheme.
A landlord must:
- Protect a tenant’s deposit with a government-supported scheme
- Provide the tenant with information regarding the chosen scheme
The landlord is expected to do this within 30 days of receiving the tenant’s deposit.
A tenant’s deposit is protected for as long as they are tenants of the same property with the same landlord. The deposit will still be secure when the tenancy is renewed or if the tenant stays longer than any original stipulated term in their contract.
Tenants can check that their deposit is protected by checking online to see if their deposit is listed on the schemes website. Alternatively, tenants can contact the schemes directly and ask them.
The available tenancy protection schemes are:
- Deposit Protection Service (DPS)
- The Dispute Service (TDS)
If a landlord fails to protect a tenant’s deposit or inform them about it as required by law, they shall be fined and prevented from ending your tenancy suddenly.
Disputes Regarding Tenancy Deposits
In the event that a landlord and tenant come to a disagreement regarding their deposit, there are various ways to resolve the dispute. If they are unable to do so within themselves, then the protection scheme may step in.
Every tenancy deposit scheme has a provision for an alternative dispute resolution (ADR). It is free and seeks to resolve amicably, any disputes between a tenant and their landlord outside the court.
The protection scheme often provides the tenant with information on what to do should they get into a dispute about deposit returns when a tenancy ends.
Both the landlord and tenant must agree to use the alternative dispute resolution, and they must accept any decision made as part of the procedure.
If there is no resolution from the ADR, then a court proceeding may be inevitable as the final solution.
Information a Landlord Must Give
A landlord must supply the tenant with certain information about the protection of their deposit. This is often referred to as a prescribed information.
A landlord must inform a tenant in writing about;
- The specifics of the selected tenancy deposit scheme
- How to recover their deposit when they leave
- What to do if there is disagreement about its return
- The landlord’s name, address, and details of how to reach them or the letting agent that handled the tenancy
The landlord must also give the tenant a duly signed copy of the deposit protection certificate.
In some situations, the tenant may be issued a repayment ID number. This is given by the company that operates the scheme, not the landlord. Tenants are expected to keep the number safe until they are about to get their deposit back, upon leaving.
Uses of the Tenant Deposit
The tenant deposit is mainly an ‘insurance policy’ for the landlord in case a tenant defaults. The landlord can make deductions from the deposit after a tenant leaves the property. However, they must inform the tenant about the details of the deduction, and return what is left.
What can the landlord deduct?
- Unpaid rent
- Damage to the property (broken windows, electrical tampering etc.)
- Missing objects
- Cost of cleaning
- These items must be highlighted in the original tenancy agreement signed by the landlord and tenant.
Deductions a landlord cannot make:
- Costs incurred for re-letting the house
- Unpaid utility bill such as gas, power, water- if tenant’s name isn’t on the bill.
Expected Trends in the Buy-to-let Property Climate
Following the chancellor’s autumn statement last year where he announced that the surcharges for stamp duty would be increased and tax relief reduced from 40 percent to 20 percent in 2017, landlords have stated that they will be forced to raise their rents to offset the costs.
As a result we may be seeing increases in both rents and deposits. Experts have warned that the coming months may not be rosy for tenants, but will Scotland still maintain its low figure tenant deposits?