Local Government and Communities Committee

Meeting date: Wednesday, September 25, 2019

Official Report 602KB pdf

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Subordinate Legislation

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Tenancy Deposit Schemes (Scotland) Amendment Regulations 2019 [Draft]

Agenda item 2 is consideration of the Tenancy Deposit Schemes (Scotland) Amendment Regulations 2019 [Draft], which make minor improvements to the operation of tenancy deposit schemes to address new legislation, payment by instalments and best practice.

I welcome Kevin Stewart, Minister for Local Government, Housing and Planning, and Charlotte McHaffie, head of private rented sector policy at the Scottish Government. The instrument has been laid under the affirmative procedure, which means that the Parliament must approve it before the provisions can come into force. Following this evidence session, the committee will be invited, at agenda item 3, to consider a motion to approve the instrument.

I invite the minister to make a short opening statement.

Good morning, convener. I am pleased to present the Tenancy Deposit Schemes (Scotland) Amendment Regulations 2019 for the committee’s scrutiny. If the regulations are approved, they will strengthen the principal regulations—the Tenancy Deposit Schemes (Scotland) Regulations 2011—and ensure that tenancy deposit schemes continue to work within a robust operating framework.

The original objectives for bringing forward tenancy deposit regulations and approved tenancy deposit schemes were

“to reduce the number of unfairly withheld tenancy deposits .. ensure that deposits are safeguarded throughout the duration of the tenancy”

and

“ensure that deposits are returned quickly and fairly, particularly where there is a dispute over the return of the deposit ... To tenant or landlord.”

Our tenancy deposit regime was established by the Housing (Scotland) Act 2006, which requires ministers to approve schemes before they can protect deposits. Three tenancy deposit schemes were approved by ministers in Scotland in 2012. The 2006 act also obliges ministers to review each scheme from time to time and gives them the power, once they have done so, to ensure that any scheme is revised.

When the schemes were approaching the end of their fifth year of operation, I asked my officials to conduct a review of the schemes and the operating framework and conditions for the protection of tenancy deposits. The review sought views independently from those tenants and landlords who have used the tenancy deposit schemes and from the schemes themselves. The results of the review were published in December 2018 and I was pleased that it found that the principal regulations continued to provide “a robust regulatory framework”. As expected, the review also found that the regulations required minor updates, not least to keep abreast of our private rented sector reforms.

The regulations that are before the committee today will make improvements to the operation of the tenancy deposit schemes. Those changes respond directly to the review and address best practice, increase efficiency and take account of new legislation, for example by ensuring that information about sanctions is provided by the schemes to the tenant when a landlord has not met the requirement to lodge the deposit within 30 working days, helping us to strengthen enforcement; requiring the landlord to provide the tenant with certain information when the deposit is being paid in instalments; expediting repayment of a protected deposit when the landlord does not wish to retain any part of it; and ensuring that a landlord is not required to pay a deposit into the schemes when a private residential tenancy has been ended and the deposit repaid to the tenant prior to the date by which landlords must lodge the deposit.

Not all of those improvements will require legislation. It is to the credit of the approved schemes that, through lessons learned since start-up in 2012, they can evidence improved performance and internal changes.

In compliance with the 2006 act, I have asked the three tenancy deposit schemes to submit revised procedures to me to ensure that they comply with the amended regulations. I hope to approve the revised schemes soon after the amendment regulations come into force.

Thank you, convener. I am happy to answer questions on the regulations.

Thank you, minister. Do members have any questions?

Do the regulations strengthen the interests of tenants more than those of landlords, or of landlords more than tenants?

There is a balance to be struck in all these cases, and I think that we have struck that balance. The regulations will ensure that there is fairness across the board.

Figure 14 in the “Review of Tenancy Deposit Schemes in Scotland” shows whether tenants and landlords felt that they were treated fairly at the end of the tenancy. Virtually all tenants felt that they had been treated fairly, but a lot of landlords felt that they had not. What was behind that?

There is always a balance to be struck. I did not do the analysis so I will pass over to Ms McHaffie, because her team undertook the analysis of the consultation responses.

There is a challenge around some of the evidence that is required when a deposit goes into a dispute. That is why the schemes have an adjudication process, which exists to resolve such disputes when they occur. The difficulty arises when the landlord has not necessarily gathered enough evidence to demonstrate that the claim for that deposit is sufficient. I think that that is where some of the dissatisfaction with the outcome of the process lies.

The regulations will not change that very much.

They will not change the adjudication process. The schemes can continue to look at the process and at how information can be provided to landlords at an earlier stage to say what they need to be doing when they set up the tenancy. For example, with the information in the schedule of condition they can demonstrate that damage has been caused by the tenant and that they have a claim to the deposit.

How would the regulations speed up payment to a tenant when the landlord does not want any money back?

Again, there is a balance to be struck in getting all this absolutely right. The review showed that, in the main, the scheme is working well; that is why only minor changes are being made. A fair amount of scrutiny of the scheme has been done. If I remember rightly, Mr Wightman asked seven parliamentary questions about this not so long ago. As we know from our constituency casework, there is often some dispute about certain things but on the whole I think that the scheme works extremely well. As Ms McHaffie said, there is a process for dispute resolution, which tries to ensure that whoever is owed money gets it as quickly as possible.

At the moment, there is a requirement for the schemes to go back to the tenant for confirmation when the landlord has said that they do not want anything, which increases delay. When the landlord is willing to repay the whole amount there is no need to get that confirmation from the tenant, so the deposit can just be paid back. The regulations will allow that to happen.

Okay—so the landlord will not have to go back to the tenant. They will just pay them the money.

Yes.

Thank you.

As there are no further questions, we move to agenda item 3, which is formal consideration of motion S5M-18218. Minister, do you wish to speak?

No.

Motion moved,

That the Local Government and Communities Committee recommends that the Tenancy Deposit Schemes (Scotland) Amendment Regulations 2019 [draft] be approved.—[Kevin Stewart]

Motion agreed to.

The committee will report on the outcome of the instrument in due course. Does the committee agree to delegate authority to me as convener to approve a draft of our report for publication?

Members indicated agreement.

Thank you very much, minister. I suspend the meeting briefly to allow a change of witnesses.

09:39 Meeting suspended.  

09:41 On resuming—