Tenancy Deposit Laws in Scotland could see Landlords out of Pocket

03 September 2012 Categories: News

Tenancy Deposit Laws in Scotland could see Landlords out of Pocket

Scotland’s new tenancy deposit law that is due to come into force at the beginning of November could result in hundreds of Scottish letting agents going out of business as they struggle to find the deposits placed in their care. Collectively the agents in question could take millions of pounds worth of tenancy deposits with them when they go bust, so leaving a huge number of landlords with the task of finding enough money to replace their tenant’s deposit money.

It seems that many Scottish letting agents have in the past used tenant deposits as part of their businesses’ working capital but because the new law requires deposit money to be placed in one of three approved custodial schemes the money in question now needs to be recouped. This fact is being blamed for the record number of Scottish agents who are currently trying to sell up in advance of the deadline.

Managing director of VTUK, Peter Grant commented on the problem recently saying, “The clock is now ticking and agents have until  November 2 to find the finance required in order to place deposits into one of the three approved schemes.

“Given current economic conditions and the restrictions banks are placing on lending, there is a real danger that many agents simply won’t find the money and will go out of business, leaving landlords and tenants significantly out of pocket.

“It has been stated that Scottish agents could potentially have a collective £30m-£50m hole in their accounts, which really demonstrates the extent of this problem.”