A recent decision of Edinburgh Sheriff Court serves as a warning to landlords that ignoring their obligations under the Tenancy Deposit Schemes (Scotland) Regulations 2011 could come at a cost.

In Scotland, the tenancy deposit scheme was established by the Tenancy Deposit Schemes (Scotland) Regulations 2011 (the Regulations).

The Regulations

  • Apply to every landlord who is required to register in the local authority register of landlords (this covers most types of residential tenancy in Scotland, including assured and short assured tenancies, university accommodation and various other types of accommodation).
  • Contain an absolute obligation on landlords to pay any tenancy deposit into an approved scheme within thirty days of the beginning of the lease.
  • Require landlords to provide their tenants with relevant information, such as where the deposit is being held and, at the end of the lease, specific reasons for retaining any part of the deposit.
  • The recent case of Russel-Smith, Dion-Jones and Herskowit v Uchegbu serves as important reminder to landlords about the consequences of failure to abide by the Regulations.

Background

The Pursuers, three students, entered into a short assured tenancy of a flat in Edinburgh and in May 2015 paid a tenancy deposit of £1,550 to secure it. However, it was not until May 2016 (two months before their lease was due to expire) that the deposit was paid by their landlord into an approved scheme. It was only at that stage that the students received confirmation that their deposit had been paid into an approved scheme, together with the statutory information that they were entitled to.

Edinburgh Sheriff Court considered the matter and concluded that the landlord was automatically liable for depriving her tenants of the protection given by the scheme. The Court awarded the students the total sum of £1,853 and outlays.

The sum of £1,853 was made up of two elements:

  1. Compensation
  2. A financial penalty

Compensation was calculated on the basis of: Value of Deposit/Term of Lease × Number of days in breach of the Regulations

In addition to that sum, a financial penalty was available to reflect the fact that the landlord had been reminded of her obligations by the Council and still failed to comply.

Calculation of this penalty depended on various factors, including:

  • Whether non-compliance was intentional.
  • Whether any prejudice had been suffered by the tenants as a result of the breach.
  • Whether the landlord admitted to being in breach and had taken steps to remedy it.

In the circumstances, the Court was persuaded that the landlady had merely been slow in attending to her obligations, and in any event the tenants had ultimately received their deposit in full without dispute.

Comment

The case serves as an important reminder both to professional and non-professional landlords that failure to adhere to the Regulations could be a costly lesson.

Landlords must bear in mind that:

  • Breach of the Regulations is a strict liability offence – landlords cannot plead ignorance of their obligations to avoid paying.
  • If breached, the sum owed to tenants will increase over time, making it important to remedy a breach quickly.
  • Landlords who have paid into an approved scheme may nevertheless be found liable if tenants are not updated or provided with relevant information as to the status of their deposit.
  • Additional fines will be payable where the landlord’s non-compliance is deliberate or in ignorance of requests from the tenants or local authority.