New Scottish law could spell disaster for some landlords and agents

04 May 2012 Categories: News

New Scottish law could spell disaster for some landlords and agents

In July of this year Scotland will finally catch up to the rest of the UK in terms of tenant deposit protection schemes but the new law that states all deposits from tenants (whether from a new tenancy or an existing one) have to be paid into the new scheme could spell disaster for some landlords and letting agents.

The custodial scheme, which becomes legally operational on July 2nd, will act like a dedicated bank for tenancy deposits, and landlords and letting agents have until November 12th to pay in any deposits they already have and any new deposits they take in the interim.

While this won’t cause a problem for those who have safeguarded their tenant deposits, it undoubtedly will be for the significant portion of Scottish landlords and letting agents who use tenant deposit money as working capital – and for a small letting agent with a modest 300 property portfolio this could amount to more than £200,000.

It is estimated that throughoutScotlandover £100million will need to be paid into the tenancy deposit scheme this year (from existing tenancies) and that over £21million of this will come from Edinburgh and Glasgow alone. The Property Ombudsman has warned that the new law could put a significant number of Scottish agents out of business.