How Do Tenancy Deposits Work in Scotland?
In Scotland you can take a deposit of up to two months' rent, and in most cases you must protect it in one of three government-approved schemes within 30 working days of the tenancy starting. Within 30 days you must also give your tenant specific information about the deposit in writing.
If you get it wrong, your tenant can apply to the First-tier Tribunal for Scotland. The tribunal can order you to pay compensation of up to three times the deposit, and the deposit itself must still be returned or protected.
How Much Deposit You Can Take
The maximum deposit for a private tenancy in Scotland is two months' rent. On a flat let at £950 a month, the most you can ask for is £1,900.
The deposit covers the costs you may face when your tenant moves out, such as:
- unpaid rent or bills
- damage to the property
- items missing from the inventory
- cleaning, if the property is not left in a reasonable condition
You cannot use the deposit to replace items that are worn through normal wear and tear. If there are no costs to claim, the full deposit must be returned.
The Three Approved Schemes
There are three government-approved tenancy deposit schemes in Scotland:
- Letting Protection Service Scotland
- mydeposits Scotland
- SafeDeposits Scotland
You can choose any of the three. The scheme holds your tenant's money for the length of the tenancy, and neither you nor the tenant can use it during that time. All three offer a free dispute resolution service at the end of the tenancy.
The Deposit Timeline
| When | What you must do |
|---|---|
| Before the tenancy starts | Agree the deposit amount (no more than two months' rent) and complete a detailed inventory with photographs |
| Within 30 working days of the start | Pay the deposit into one of the three approved schemes |
| Within 30 days of the start | Give your tenant the required deposit information in writing |
| During the tenancy | Leave the deposit in the scheme. You cannot access or use it |
| When the tenant moves out | Tell the scheme the tenancy has ended, and either ask for a full return or propose deductions |
| After you propose deductions | The scheme asks your tenant, who has 30 working days to agree or disagree |
| If you cannot agree | Either side can use the scheme's free adjudication service |
What You Must Tell Your Tenant
Within 30 days of the tenancy starting, you must give your tenant the following information in writing:
- The address of the rented property.
- How much deposit they paid and the date you received it.
- The date you paid it into the scheme.
- The name and contact details of the scheme.
- Confirmation that you are registered as a landlord, or have applied to register.
- The circumstances in which you may want to keep some or all of the deposit at the end of the tenancy.
Most schemes produce a certificate or confirmation that covers much of this. Check that it includes your landlord registration details and your reasons for possible deductions, and add anything missing in a covering letter or email. Keep a copy of what you sent and when you sent it.
When You Do Not Need a Scheme
You do not need to protect a deposit in a scheme if any of the following apply:
- you return the full deposit within 30 working days of the tenancy starting
- you live in the property yourself
- you are renting to a family member (cousins are not included)
- you are renting to a religious organisation
- you are renting out supported accommodation
- it is an agricultural or crofting tenancy
- the property is subject to a control order
- you are letting out a holiday home
For a normal buy to let flat let on a Private Residential Tenancy, none of these will apply, so assume the deposit must be protected.
Fees You Cannot Charge
It is against the law to charge your tenant any other fees for starting or renewing a tenancy. This includes:
- key money
- credit check fees
- administration fees
- non-refundable holding deposits
These are illegal premiums, and a tenant can claim them back. If you use a letting agent, the agent's fees are paid by you, not the tenant.
Getting the Deposit Back at the End of the Tenancy
When your tenant moves out, tell your scheme that the tenancy has ended. If there are no problems, tell the scheme to return the deposit in full.
If you want to make deductions, talk to your tenant first to see whether they agree. Then tell the scheme how much you want to keep and why. The scheme will contact your tenant, who has 30 working days to say whether they agree. If they do not reply, their share stays in the scheme and you receive your share.
If you do nothing, your tenant can ask the scheme for the money directly. The scheme will return the full deposit to the tenant within 30 days unless you contact it to propose deductions.
If your tenant disputes a deduction, the scheme's independent adjudicator reviews the evidence from both sides and decides how the deposit is split. If you cannot prove why you are asking for a deduction, the tenant gets the full deposit back. A signed inventory, dated photographs and receipts for cleaning or repairs make a big difference.
Example: a straightforward deduction
Euan's tenant paid a deposit of £1,600, which is two months' rent at £800 a month. At the end of the tenancy there is a burn mark on the worktop that is not on the check-in inventory. A replacement section costs £240, and Euan has a quote to prove it.
He proposes a £240 deduction through the scheme. The tenant agrees, so the scheme pays £240 to Euan and returns £1,360 to the tenant. If the tenant had disagreed, an adjudicator would have decided the split based on the inventory, the photographs and the quote.
The Penalty for Not Protecting a Deposit
If you fail to protect a deposit, or do not give the required information, your tenant can apply to the First-tier Tribunal for Scotland (Housing and Property Chamber). They can do this during the tenancy or up to three months after it ends.
The tribunal can order you to:
- protect the deposit, if the tenant still lives in the property
- return the deposit, if they have moved out
- pay the tenant compensation of up to three times the deposit
Example: the cost of a late deposit
Kirsty takes a £1,000 deposit and forgets to lodge it with a scheme. Her tenant moves out a year later and applies to the tribunal within three months.
The tribunal can order her to pay compensation of up to £3,000, which is three times the deposit, as well as dealing with the return of the £1,000 itself. The tribunal decides the amount based on the circumstances of the case, up to that maximum.
Related Information
Related Questions
What counts as 30 working days?
Working days exclude weekends and public holidays. In practice, 30 working days is roughly six weeks from the start of the tenancy. The safest approach is to lodge the deposit as soon as you receive it, so the deadline never becomes an issue.
Can I take a deposit of more than two months' rent for a tenant with a pet?
No. The two months' rent limit applies to the total deposit. You cannot take a separate or additional pet deposit on top that takes the total above two months' rent.
Can I deduct for normal wear and tear?
No. The deposit cannot be used to replace items that are damaged or worn through normal wear and tear. Deductions should cover things like unpaid rent, damage beyond normal use, missing items and cleaning where the property was not left in a reasonable condition.
Does the tenancy deposit rule apply to a lodger?
No. If you live in the property yourself, the deposit scheme rules do not apply. That exemption covers lodgers living in your own home, not buy to let properties you do not live in.
Sources
- mygov.scot: Asking for a deposit as a private landlord
- mygov.scot: When you must protect a tenancy deposit
- mygov.scot: Returning a deposit at the end of a tenancy
This guide is general information, not financial, tax or legal advice. Rules change, so check your own position with a qualified adviser before you act.