The Tenancy Deposit Schemes (Scotland) Regulations 2011

Made: 6th March 2011

Coming into force in accordance with regulation 1

In accordance with section 191(5) of that Act, a draft of this instrument has been laid before and approved by the Scottish Parliament.

PART 1 — Introductory and General

Citation and commencement

1

These Regulations may be cited as the Tenancy Deposit Schemes (Scotland) Regulations 2011 and come into force on the day after the day on which they are made.

Interpretation

2

In these Regulations—

• “the Act” means the Housing (Scotland) Act 2006;

• “the 2004 Act” means the Antisocial Behaviour etc. (Scotland) Act 2004[^f00002];

• “adjudicator” means a person appointed by an approved scheme to resolve disputes relating to tenancy deposits held by that scheme;

• “approval” and “approved” refer to approval by the Scottish Ministers under section 122 (approval of tenancy deposit schemes) of the Act;

• “approved scheme” means a tenancy deposit scheme that has been approved by virtue of section 122 of the Act;

• “designated account” means an account held by the scheme administrator in accordance with regulation 16;

• “landlord” refers to a landlord, within the meaning conferred by the Act, of a relevant tenancy;

• “operational”, in relation to a tenancy deposit scheme, means that the scheme is in a position to accept and safeguard deposits as referred to in regulation 14(1)(a);

• “relevant tenancy” has the meaning given by regulation 3(3) and references to a “tenancy” are to be construed accordingly;

• “scheme administrator” refers to the person or body who may administer an approved scheme;

• “tenancy deposit” has the meaning conferred by section 120(1) (tenancy deposits: preliminary) of the Act;

• “tenancy deposit scheme” has the meaning conferred by section120(2) of the Act;

• “tenant” refers to a tenant of a relevant tenancy and includes joint tenants and former tenants by whom a tenancy deposit was paid;

• “working day” means a day that is not a Saturday or Sunday, nor any day that is a bank holiday under the Banking and Financial Dealings Act 1971[^f00003] in any part of the United Kingdom; and

• “write” and “writing” include electronic communications within the meaning of section 15 (general interpretation) of the Electronic Communications Act 2000[^f00004].

Duties in relation to tenancy deposits

3

• (1) A landlord who has received a tenancy deposit in connection with a relevant tenancy must, within 30 working days of the beginning of the tenancy—

• (a) pay the deposit to the scheme administrator of an approved scheme; and

• (b) provide the tenant with the information required under regulation 42.

• (1A) Paragraph (1) does not apply—

• (a) where the tenancy comes to an end by virtue of section 48 or 50 of the Private Housing (Tenancies) (Scotland) Act 2016, and

• (b) the full amount of the tenancy deposit received by the landlord is returned to the tenant by the landlord,

within 30 working days of the beginning of the tenancy.

• (2) The landlord must ensure that any tenancy deposit paid in connection with a relevant tenancy is held by an approved scheme from the date it is first paid to a tenancy deposit scheme under paragraph (1)(a) until it is repaid in accordance with these Regulations following the end of the tenancy.

• (2A) Where the landlord and the tenant agree that the tenancy deposit is to be paid in instalments, paragraphs (1) and (2) apply as if—

• (a) the references to deposit were to each instalment of the deposit, and

• (b) the reference to the beginning of the tenancy were to the date when any instalment of the deposit is received by the landlord.

• (3) A “relevant tenancy” for the purposes of paragraphs (1) and (2) means any tenancy or occupancy arrangement—

• (a) in respect of which the landlord is a relevant person; and

• (b) by virtue of which a house is occupied by an unconnected person,

unless the use of the house is of a type described in section 83(6) (application for registration) of the 2004 Act.

• (4) In this regulation, the expressions “relevant person” and “unconnected person” have the meanings conferred by section 83(8) of the 2004 Act.

Circumstances in which tenancy deposit duties apply

4

Subject to regulations 47 and 48, the duties in regulation 3 apply from the date which falls on the expiry of a period of 3 months beginning with the first date on which an approved scheme becomes operational.

5

The duties in regulation 3 do not apply if no approved scheme is operational.

Conditions for approval of a tenancy deposit scheme

6

• (1) A tenancy deposit scheme must meet the following conditions before it can be approved—

• (a) the proposed scheme administrator must meet the requirements of regulation 7;

• (b) the tenancy deposit scheme must satisfy the requirements of Parts 3 and 4;

• (c) the tenancy deposit scheme must be intended to operate on the basis of procedures that will enable it to satisfy the requirements of Part 5; and

• (d) the tenancy deposit scheme must have a dispute resolution mechanism which satisfies the requirements of regulation 33 and which will operate on the basis of the procedures set out in regulations 34 to 38.

• (2) The person or body making the proposal for a tenancy deposit scheme (whether the proposed scheme administrator or any other person) must provide the Scottish Ministers with any information they may reasonably require in order to assess whether the tenancy deposit scheme meets the conditions in paragraph(1).

Scheme administrator to be a fit and proper person

7

• (1) A person who acts as scheme administrator must be a fit and proper person to do so.

• (2) A proposal for a tenancy deposit scheme must include a declaration of—

• (a) whether paragraph (3) applies to any person who is proposed to act as scheme administrator; and

• (b) details of any of the matters set out in paragraph (3) that apply.

• (3) This paragraph applies if the person has—

• (a) been convicted of any offence involving fraud or other dishonesty;

• (b) been declared bankrupt; or

• (c) been disqualified from being a director of a company.

• (4) The Scottish Ministers must take into account the declaration made under paragraph (2), and any other material they consider relevant, in assessing whether a person is fit and proper for the purposes of paragraph (1).

• (5) The proposed scheme administrator must provide the Scottish Ministers with any information they require for the purpose of that assessment.

Power of Scottish Ministers to provide financial assistance

8

The Scottish Ministers may make payments, or give guarantees or other assistance in connection with—

• (a) the creation, administration or operation of an approved scheme; and

• (b) the resolution of disputes relating to an approved scheme.

PART 2 — Sanctions

Court orders

9

• (1) A tenant who has paid a tenancy deposit may apply to the First-tier Tribunal for an order under regulation 10 where the landlord did not comply with any duty in regulation 3 in respect of that tenancy deposit.

• (2) An application under paragraph (1) must be made ... no later than 3 months after the tenancy has ended.

10

If satisfied that the landlord did not comply with any duty in regulation 3 the First-tier Tribunal—

• (a) must order the landlord to pay the tenant an amount not exceeding three times the amount of the tenancy deposit; and

• (b) may, as the First-tier Tribunal considers appropriate in the circumstances of the application, order the landlord to—

• (i) pay the tenancy deposit to an approved scheme; or

• (ii) provide the tenant with the information required under regulation 42.

PART 3 — Model for operation of tenancy deposit scheme

Scheme model

11

A tenancy deposit scheme must be based on the following model—

• (a) no fee is payable by the landlord to the scheme administrator in respect of participation in, or otherwise in connection with, the scheme;

• (b) the tenancy deposit is paid by the landlord to the scheme administrator;

• (c) the scheme administrator pays the tenancy deposit into an account maintained for the purpose of holding tenancy deposits;

• (d) the tenancy deposit is held in that account until it falls to be repaid in accordance with these Regulations.

Agents

12

A tenancy deposit scheme must not operate to prevent an agent from acting on behalf of the landlord in relation to any tenancy deposit held in connection with a relevant tenancy.

Geographical coverage and administrative requirements

13

• (1) A tenancy deposit scheme must be available to all landlords and their tenants.

• (2) For the purposes of paragraph (1), a tenancy deposit scheme must put suitable procedures in place to allow—

• (a) all landlords to participate in the scheme;

• (b) all landlords to pay tenancy deposits directly to the scheme administrator;

• (c) all landlords and their tenants to apply to the scheme for repayment of the tenancy deposit in accordance with the scheme; and

• (d) all landlords and their tenants to make use of the dispute resolution mechanism provided or made available by the scheme.

• (3) An appropriate customer service facility must be available to landlords, tenants and the general public for the purposes of, in particular—

• (a) handling enquiries in relation to the scheme whether made by telephone or in writing; and

• (b) dealing with complaints about the scheme, including complaints about the service provided by the scheme administrator.

Financing and sustainability

14

• (1) A tenancy deposit scheme must operate on the basis of a business plan which will enable it, within a number of months to be specified in that business plan, to be—

• (a) in a position to accept and safeguard tenancy deposits for the purposes of Part 4 of the Act and in accordance with these Regulations; and

• (b) able to cover the cost of its operations using only its own finances, including interest (“self-financing”).

• (2) A tenancy deposit scheme must ensure that sufficient resources will be available to fund the establishment and operation of the tenancy deposit scheme from the date of approval until the date on which the scheme becomes self-financing.

• (3) A tenancy deposit scheme must have appropriate strategies in place in relation to the investment of tenancy deposits and accrued interest to support the sustainability of the tenancy deposit scheme.

Protection of deposits in the event of scheme failure etc.

15

• (1) A tenancy deposit scheme must have procedures to safeguard, and ensure the repayment in accordance with these Regulations of, tenancy deposits held by the scheme administrator in the event that the scheme fails or otherwise ceases to be operational.

• (2) A tenancy deposit scheme must have appropriate procedures by which as soon as the scheme administrator becomes aware that the scheme is likely to fail or otherwise cease to be operational the scheme administrator will give notice to—

• (a) all landlords and tenants whose deposits are held by the scheme; and

• (b) the Scottish Ministers.

PART 4 — Accounting requirements in relation to tenancy deposit schemes

Designated accounts

16

• (1) A scheme administrator must hold one or more designated accounts for the purposes of regulation 11(c).

• (2) Designated accounts must not contain any sums other than—

• (a) tenancy deposits paid into them by the scheme administrator;

• (b) such sums of money belonging to the scheme administrator as may be necessary for the purpose of opening the account;

• (c) such sums of money as may be necessary to replace any sum which by error has been withdrawn from the account; and

• (d) interest.

17

A scheme administrator must follow appropriate accounting and administrative practices to ensure that—

• (a) tenancy deposits received by the scheme administrator are paid without delay into the relevant designated account;

• (b) at all times the sum at the credit of the designated account, or where there are more such accounts than one, the total of the sums at the credit of those accounts, is not less than the total of the amounts of tenancy deposits held by the tenancy deposit scheme; and

• (c) at all times each tenancy deposit held in a designated account is attributable to the landlord on whose behalf it was paid in to the account, as well as to the tenant to whom it relates.

18

Sums may be withdrawn from a designated account only for the following purposes—

• (a) repayment of tenancy deposits in accordance with these Regulations;

• (b) meeting the costs of the scheme from interest accrued;

• (c) improving the quality of service provided by the scheme administrator from interest accrued, where the interest is surplus to that required to meet the costs of the scheme; and

• (d) distributing, applying or investing interest accrued, where the conditions in regulation 19 are met.

19

The conditions for withdrawal of sums under regulation 18(d) are—

• (a) the income derived from interest accrued exceeds that required for the purposes set out in regulation 18(a), (b) and (c);

• (b) the distribution, application or investment of that income will not adversely affect the sustainability of the tenancy deposit scheme or its ability to be self-financing within the meaning of regulation 14; and

• (c) where the income is to be invested, the proposed investment is in accordance with the strategies referred to in regulation 14(3).

PART 5 — Procedures for payment, holding and repayment of deposits

Payment of tenancy deposits to a tenancy deposit scheme

20

A scheme administrator must accept any tenancy deposit paid to an approved scheme by or on behalf of a landlord who has received the deposit in connection with a relevant tenancy, whether it was paid in compliance with regulation 3(1)(a) or at a later date.

21

A tenancy deposit paid to an approved scheme must be accompanied by sufficient information to enable the scheme administrator, both on receipt and at the end of the tenancy, to—

• (a) identify and contact the landlord and tenant; and

• (b) identify the tenancy and the property in connection with which the tenancy deposit was paid to the landlord.

22

• (1) On receipt of a tenancy deposit and the required accompanying information, the scheme administrator must—

• (a) pay the tenancy deposit into a designated account; and

• (b) issue written confirmation to the landlord and tenant that the tenancy deposit has been received and paid into a designated account.

• (2) The scheme administrator must also advise the landlord and tenant of—

• (a) the amount of the deposit;

• (b) the date on which the deposit was received by the scheme administrator;

• (c) the address of the property to which the tenancy deposit relates;

• (d) the name and contact details of the landlord; ...

• (e) details of how to contact the scheme administrator to notify any inaccuracies in the information in sub-paragraphs (a) to (d) , and

• (f) details of the sanctions contained in regulations 9 and 10 (First-tier Tribunal orders).

Landlord application to transfer a tenancy deposit

23

• (1) A landlord may apply for repayment of a tenancy deposit from an approved scheme for the purpose of transferring it to another approved scheme.

• (2) On receipt of such an application, the scheme administrator must—

• (a) if so requested, pay the tenancy deposit to the other approved scheme on the landlord’s behalf; or

• (b) in any other case, repay the tenancy deposit to the landlord.

• (3) The scheme administrator must notify the tenant in writing of the date on which the deposit was paid to the other approved scheme or repaid to the landlord.

Application for repayment of a tenancy deposit

24

• (1) A landlord must apply to the scheme administrator for repayment of any tenancy deposit paid to an approved scheme on, or as soon as is reasonably practicable after, the end of the tenancy.

• (2) The landlord’s application must specify the date on which the tenancy ended and the amount of the tenancy deposit which, in the view of the landlord, should be—

• (a) repaid to the tenant; and

• (b) repaid to the landlord.

• (3) The tenant may apply for repayment of the tenancy deposit, but if an application for repayment has been made by the landlord in accordance with paragraph (1), or is made within 30 working days of the tenant’s application, the scheme administrator must not progress the application.