Publication - Research publication

Tenancy Deposit Scheme: review

Published: 21 Dec 2018
Directorate:
Housing and Social Justice Directorate
Part of:
Housing
ISBN:
9781787814837

Results from research with tenants, landlords and schemes as part of a review of the Tenancy Deposit Scheme in Scotland.

63 page PDF

861.8 kB

63 page PDF

861.8 kB

Contents
Tenancy Deposit Scheme: review
Executive summary

63 page PDF

861.8 kB

Executive summary

Since 2012 all tenancy deposits in relation to the private rented sector must now be protected by one of three tenancy deposit schemes. The Minister for Local Government and Housing decided that as the schemes were approaching the end of the fifth year of operation, the time was right for a review of the three approved schemes

The review intended to achieve the following:

  • examine whether the introduction of the tenancy deposit scheme (TDS) resolved the issues it was intended to
  • understand whether the TDS works well for all tenants
  • understand whether the TDS works well for all landlords
  • explore why are deposits going unclaimed and explore what should be done with the unclaimed monies
  • assess whether the current regulations fair and fit for purpose

The schemes were sent written questionnaires to complete electronically, whilst landlords and tenants completed an online survey distributed through the schemes themselves.

Key findings from the schemes' perspective:

  • There is a broad consensus that the regulations[1] continue to provide a robust regulatory framework for the protection of tenants' deposits and the conditions for the operation of the schemes.
  • Unclaimed deposits appear to come mainly from students, especially overseas students.
  • Initial operation of the tenancy deposit service required more direct support with tenants and landlords than anticipated
  • There is evidence that early education and support for tenants and landlords as provided by schemes is improving performance.
  • There has been an issue around the impact of low interest. In particular, five-year rates offered now are lower than those achieved in 2013/14. This may have an effect on account surpluses in the future if the rates do not increase and could have a knock on impact for scheme's ability to innovate.

Key findings from the tenants' perspective:

  • The majority of tenants knew enough about the purpose and the way the schemes work. Tenants in older households, in small towns and rural areas, and those who did not rent their property through a letting agent were more likely to agree that they knew enough about the tenancy deposit schemes.
  • Tenants who had received information reported that they did so mainly through their letting agent, followed by the scheme itself and less frequently by their landlord.
  • Some tenants felt that they needed more information, particularly about what happens in case of a disagreement regarding the deposit, how the deposit will be returned and how to make a complaint. Tenants in older households, were more likely to want further information about their scheme.
  • Around 8 out of 10 tenants could not recall having left an unclaimed deposit and did not know someone who had, and this proportion was higher for tenants in older households.
  • The vast majority of tenants claimed that their deposit was protected by one of the schemes, with 7 out of 10 reporting that it has been protected within 30 days of the start of the tenancy. However, 20% of the tenants, especially tenants with children, reported that they had a tenancy in the last five years where the deposit had been unprotected.
  • Around 9 out of 10 tenants felt confident that their deposit was safe, with tenants in older households, those who did not use a letting agent and those whose tenancy began more recently being the most satisfied with their scheme. Tenants generally felt that they have been treated fairly by the scheme, especially tenants in older households and those who had not used a letting agency.
  • Tenants were asked a series of questions about a tenancy that ended in the last three years and their experiences reclaiming their deposits. Almost 8 out of 10 tenants received their deposit back on time and the majority received their deposit in full, with 67% receiving their deposit back on time and in full, especially tenants in older households, tenants who did not use a letting agent and those whose tenancy ended before 2017.
  • The most common reasons for not receiving a deposit back on time was delay caused by the landlord and by negotiations.
  • The most common reason for deposit deductions was damage to the property, followed by rent arrears. Almost 6 out of 10 tenants who did not receive back their deposit in full and/or on time did not dispute it with the scheme, mainly because they already had enough information or they didn't think it would make any difference.

Key findings from the landlords' perspective:

  • Longer-term landlords were more likely to be informed about how tenancy deposit schemes work compared to newer landlords.
  • The vast majority of landlords were positive about the tenancy scheme regulations and especially felt that they were good for their tenants and ensured that the deposits are protected, while more than half agreed that the regulations were also good for landlords and that they ensured deposits were returned quickly and fairly. Longer-term landlords and those owning more than one property were less positive towards the scheme regulations.
  • Longer-term landlords were asked their overall opinion about the schemes in 2012 - when the schemes were first introduced, and again in 2018. In 2012, 4 out of 10 landlords were positive towards the scheme, 34% were neutral, while 21% felt negative. In 2018, opinions were slightly more positive, but a quarter still felt negative towards the scheme.
  • Unclaimed deposits continue to be protected by the schemes and the Scottish Government is exploring how best to deal with them. Just over half of landlords would not object to this money being invested in improving the private rented sector. Of those that did not agree with this suggestion, the majority suggested that landlords should be given the money with a smaller proportion suggesting the money should be given to charity, to homelessness or to the social/affordable housing sector.
  • The majority of landlords claimed to be satisfied with the scheme they use, mainly because protecting their tenants' deposit had been easy. However, 1 out of 10 landlords was dissatisfied with their scheme, most commonly because the scheme was unable to resolve an issue for them.
  • Landlords were more likely than tenants to have used the dispute service of the scheme, but still the majority had not, mainly because they did not want to spend time/effort or because they had already agreed with the tenant.
  • Finally, landlords' were asked how much they knew about recent private renting sector changes. Awareness was generally low; 4 out of 10 knew a lot about the new private residential tenancy, but far fewer knew a lot about letting agent registration, letting agent code of practices or the First-Tier Tribunal for Scotland. Landlords owning more than one property tended to be more informed on the changes, as well as intentional and longer-term landlords.

Contact

Email: Sarah Newton