Tenancy Deposit Protection Scheme
The final item of business is a members' business debate on motion S3M-1865, in the name of Claire Baker, on a tenancy deposit protection scheme for Scotland. The debate will be concluded without any question being put.
Motion debated,
That the Parliament is concerned that the withholding of deposits unreasonably continues to be a problem for tenants in the private rented sector; notes that the private rented sector provides over 230,000 homes to households in Scotland, some 8% of all households, including families, students, migrant workers and young professionals; further notes that many tenants, on leaving a tenancy, rely on the return of their deposit to pay the upfront deposit and rent for their new property and that withholding a deposit unfairly can lead to hardship, debt and ultimately homelessness; highlights recent research by St Andrews University Students' Association that found that 24% of students there have had unjustified deductions made from their deposits and 28% have faced unreasonable delays of more than 28 days in returning their deposits; acknowledges the successful introduction of the tenancy deposit protection scheme in operation in England and Wales which ensures protection for both landlords and tenants, and believes that powers already on statute in the Housing (Scotland) Act 2006 could be used to further a deposit protection scheme for Scotland, building on landlord registration and accreditation initiatives already in place.
I am delighted to speak on tenancy deposit schemes in my maiden members' business debate. It is always a pleasure to be involved in a debate about a matter on which a solution can be found. I am sure that members will join me in welcoming to the gallery representatives from the National Union of Students and students from the University of Edinburgh, the University of St Andrews, the University of Stirling, and Heriot-Watt University—I am sure that they have already had an entertaining time.
I became aware of the inadequacy of the current arrangements when students from the University of St Andrews contacted me after losing their deposits because their letting agency had gone bust. I wrote to the Minister for Communities and Sport, who gave the only possible reply, which was that students could pursue the problem through the registration scheme or the small claims court. Neither option was suitable and it was clear that the tenants would never get their deposits back. If a custodial tenancy deposit scheme had been in place, their money would have been safe.
The need for such a scheme is growing. The private rented sector has grown to more than 10 per cent of housing and accounts for more than 230,000 households in Scotland. The sector offers flexibility that meets the needs of students, young professionals, migrant workers and many families. However, it is unfortunate that there is almost acceptance of a poor system in relation to deposits, in which vulnerable tenants, in particular tenants who rent from unaccredited landlords, suffer.
As tenants commonly have to pay deposits up front, unfair deductions or delays in returning deposits can cause debt, threaten tenancies and even lead to homelessness in the worst-case scenario. A tenancy deposit scheme would protect tenants from unfair deductions to deposits and from delays in repayment and could offer dispute resolution services.
In England and Wales, three mandatory tenancy deposit schemes have been in place for more than a year and have been acknowledged to be a success. More than a million tenancies are covered and disputes between tenants and landlords have been reduced to a minimum. In addition, the schemes are entirely self-financing. In a custodial scheme, in which deposits are held by a third party rather than by the landlord, a proportion of the interest from deposits is used to cover the scheme's running costs. There are no fees for landlords and tenants receive a proportion of the interest on their deposit. That is an improvement on the current arrangements for many tenants.
As we know, Parliament is keen on international comparisons. I am pleased to report that similar schemes exist in Ireland, Belgium, France, New Zealand, Australia and Canada.
Having met the National Landlords Association and the Scottish Association of Landlords, I appreciate their reservations about the introduction of such a scheme in Scotland. However, I firmly believe that a custodial scheme that would pay for itself would have many benefits for landlords as well as for tenants. In Ireland, landlords protested that the sector would collapse if such a scheme were to be introduced, but in fact the sector has flourished since its introduction. In England and Wales, the National Landlords Association runs one of the schemes.
In Scotland, with registration and accreditation, the sector is showing itself to be forward looking and keen to meet high standards. I believe that a tenancy deposit scheme could only help to enhance that reputation. It is clear that there are inconsistencies at present in the handling of deposits, and that there is a lack of clarity and understanding of the issue among landlords and tenants. The Scottish Government should act now to use the powers that were left for it on statute.
Although the minister has pushed forward with landlord registration and accreditation, there has been less drive on a deposit protection scheme, albeit that it is also a measure in the Housing (Scotland) Act 2006. Looking back to the passage of the act, it is clear that concerns were expressed that registration and accreditation would not, of themselves, tackle the problems of tenancy deposit dispute. At the time of the passage of the act, there was strong cross-party support. My fellow Fife MSP, Tricia Marwick—with whom, I admit, I do not agree on many occasions—lodged an amendment on the issue. At committee stage, she said
"Good landlords will be perfectly happy with a scheme that will separate them from rip-off merchants."—[Official Report, Communities Committee, 5 October 2005; c 2504.]
Strong stuff indeed. It is therefore a pity that SNP back benchers have not been as vocal on the issue when their party is in government as when it was in opposition, albeit that some SNP back benchers continue to support the proposal. The political argument has been won. The measure was included in the 2006 act because Parliament recognised the need for such a scheme. We should now be pushing ahead and introducing a scheme.
A circular that the former Scottish Executive released in August 2006 said that
"the provisional estimate is that arrangements"
for a deposit protection scheme
"could be operational by mid-2008."
Even allowing for civil service caveats, the intention was clearly that a scheme would be in place by this summer. A tenancy deposit scheme should have been in the ministerial in-tray, but we have instead seen delay in the progression of such a scheme in Scotland. Only now—a whole year since the election—is the private rented sector tenant survey finally under way.
While the Government has lingered, events have overtaken it. The total deposits that are held by private sector landlords have reached unprecedented levels. Shelter Scotland estimates that the amount is about £50 million. However, using the latest Scottish household survey research, the figure could be closer to £80 million. Schemes in England and Wales have been up and running for a year. The Scottish Government can now draw upon that experience, as it can on the research and evaluation that took place before those schemes were introduced.
Recently, the National Union of Students conducted research that found that 33 per cent of students reported unfair delays or deductions from deposits at the end of their tenancies. At the moment many tenants, including students who are going to university in the autumn, are looking for accommodation. It is only fair that those tenants, including students and their parents, have similar protection to that which is offered to tenants, including students, in the rest of the United Kingdom.
A tenancy deposit scheme that is combined with an arbitration service has something to offer to both tenants and landlords. The powers are in place—they are ready and waiting to be used. In the meantime, up to £80 million is being held in the private rented sector without regulation on how it is handled, when it is returned, or who receives the interest from the sums involved, the total of which is vast.
As a first step, a voluntary scheme would at least provide some protection. I welcome a commitment from the minister that he will explore the possibility of providing voluntary access to the existing schemes in England and Wales, before he puts in place a mandatory scheme. That said, the evidence on voluntary schemes is not particularly positive. Although good landlords would join, the vulnerable tenant would still be left exposed. I hope that the minister will take the opportunity of the debate to put on record his agreement in principle to the tenancy deposit scheme and to commit to consulting over the summer to shape what a future scheme or schemes would look like.
A tenancy deposit scheme would be an improvement to the private sector in Scotland. It would not need legislation. It would make a positive impact quickly and deliver a huge benefit for tenants and landlords without disproportionate cost to the Government, tenants or landlords. There is no reason to hold off any longer from providing this valuable security to tenants.
I apologise, Presiding Officer, as I may have to leave before the end of the debate. The debate is important and is on an issue on which several members, particularly those with university constituencies, have been active. I congratulate Claire Baker on obtaining it.
To an extent, the Scottish Government has dragged its feet on the issue. As I suggested in my recent exchange with the minister during oral question time, I have a sense that, if anything, the Government is going backwards on the issue. The Housing (Scotland) Act 2006 enables arrangements for a tenancy deposit scheme to be promulgated by a statutory instrument. However, the question that the Government is asking is not how or when but whether such a scheme should be introduced.
It is not as if there is no experience elsewhere. Claire Baker told us about the experience in England and Wales and abroad, where, by all accounts, such schemes have worked well. In some ways, the issue is not a technical matter about landlord and tenant law, but is more about the broader consumer law that deals with an imbalance between the rights of the parties to a contract. As Claire Baker touched on, that situation is not dealt with satisfactorily by small claims or other court procedures. In other areas of power imbalance, such as banking or insurance, the problem has led to the establishment of an ombudsman or a similar facility. However, the issue of tenancy deposits is much simpler.
The requirement for a deposit is not unreasonable and is acknowledged in legislation. Landlords and tenants have characters ranging from saints to scoundrels and everything in between. People leave flats in a mess and have been known to trash them. When that happens, landlords are entitled to receive the costs of putting it right. However, that is not the norm and we know from experience that some landlords routinely retain deposits or overstate the cost of renovation. Good landlords do not do that. When it happens, it is not compensation, but fraud. That is sometimes combined with problems of absentee or unknown landlords, or of landlords acting through a man-of-straw agency.
A mechanism through which the deposit is held or insured independently and an independent arbitration facility are reasonable and desirable. The Citizens Advice Scotland briefing that has been prepared for the debate details a case in which a landlord held back a deposit of £850 for professional cleaning, when the flat was cleaner than it was when the tenancy began. Members will know of similar situations. Another unpleasant feature is the exploitation of young people. Many tenants are young people—students and others—some aged 17 or 18, and are away from home for the first time. Far from being the sophisticated adults that they believe themselves to be, they are often fairly naive and sometimes ignorant of their rights and of where to go for help. Some landlords rely on that and exploit it, which I find distasteful in the extreme.
The present situation is a contributor to hardship, debt and homelessness problems for young people and others who are in pressing housing need. Those problems will become worse as the mortgage and credit crunches bite. We have an acknowledged problem and a solution with legislative provision in place, with a comparator south of the border, but still the Government fiddles at the edges and is manifestly reluctant to commit to proper action. I hope that I do not do the Government an injustice when I say that it appears to be looking for lesser solutions. It is time for the Government to make progress by giving an agreement in principle. I hope that today, or in the near future, the minister will give a commitment in principle to introducing a tenancy deposit scheme. Such a scheme is overdue and will be a significant contributor to a fairer housing regime for many tenants in Scotland.
I thank Claire Baker for bringing the debate to the Parliament. The issue is important to many people and this is an important time to conduct the debate, given that the housing market is forcing people to rent, often for longer than anticipated. With that being the norm, there have been reports in the media that many landlords are seizing on the opportunity and increasing rental prices, with tenants' deposits increasing in line with that. As the motion correctly intimates, many people rely on receiving their deposits to secure or pay for future rented accommodation. Debt in Scotland is bad enough without that added burden. According to Citizens Advice Scotland, 1.7 million people had debt problems in 2006-07.
The motion suggests that we should use the Housing (Scotland) Act 2006 to introduce a tenancy deposit protection scheme similar to those in England and Wales. As the act was introduced by the previous Administration, I must ask what I think is a legitimate question about why that Administration did not introduce such a scheme at the time. During the stage 2 debate on the Housing (Scotland) Bill in October 2005, the then Deputy Minister for Communities, Johann Lamont, stated:
"Any … tenancy deposit scheme … must be considered in the context of the number of other developments that are under way".
She went on to say:
"We will not introduce any scheme whose cost we consider disproportionate."—[Official Report, Communities Committee, 5 October 2005; c 2501-2.]
Tonight, however, Claire Baker is adamant that the current Administration should introduce such measures without consultation.
Although I agree that tenants' rights and landlords' rights should be protected, I do not know whether the model that is used in England and Wales is the answer.
Will the member take an intervention?
May I just make some progress first? Thank you.
The scheme in England and Wales has been in operation for only one year, and no formal evaluation has yet been carried out. Furthermore, not every landlord in England and Wales has signed up to the scheme. My information is that two thirds have signed up.
I believe that enough research—by the NUS, Shelter and other organisations—has been carried out to allow the Government to make progress.
A circular was issued when we were in Government, suggesting that a scheme would be in place by mid-2008. I believe that the intention was to carry out the research and have something in place by now. My concern is that the Government could be moving a bit quicker.
I am sure that, if what Ms Baker says were the case, the Government would look into it, but I am not sure that it is the case. I am sure that the minister will respond to Ms Baker's point when he winds up the debate.
What safeguards are in place to ensure that the agencies that act as arbitrators do not have a conflict of interests? One scheme that is run by My Deposits Ltd—which previously traded under the name of Tenancy Deposit Solutions Ltd—is sponsored by the National Landlords Association. That leaves cases open to the possibility of decisions in favour of landlords. Would not it make more sense for more stringent landlord regulation to be introduced before forcing a new deposit scheme into practice?
Students and recent graduates are named specifically in the motion as being most at risk of falling foul of the lack of protection for tenants. I acknowledge that student debt has reached £2 billion, but I also note that that is the legacy that Labour left behind, due to its record on student finance. Individual debt is declining under the SNP—from £11,416 under Labour in 2006, to £10,947 under the SNP in 2007. The state that the United Kingdom Government has got the economy into—as well as the credit crunch from the United States—also contributes to the high levels of debt in Scotland.
Perhaps the Labour Party should concentrate on safeguarding the country's financial services before trying to pass on to the SNP Government problems that Labour could have dealt with. The SNP Government is committed to helping the people of Scotland.
I, too, must apologise for having to leave before the end of the debate.
I congratulate Claire Baker on securing tonight's debate. Scottish Conservatives fully acknowledge that many tenants rely on the return of their deposit in order to pay the up-front deposit on their new property. We also acknowledge that delays in the return of deposits can lead to difficulty and hardship. Claire Baker is correct to say in her motion that Scottish ministers have the power, under the Housing (Scotland) Act 2006 to introduce a tenancy deposit scheme if they wish to do so. However, it seems to us premature of ministers to embark on such a course without having sound evidence for so doing. We should await the outcome of the Government's surveys of private tenants and landlords. Particular issues relating to students' deposits certainly need to be tackled.
Having consulted a number of private sector landlords and landlords organisations in preparation for tonight's debate, I would like to raise a few points. If a property is managed properly, if an inventory is made up and if tenants are given a chance to comment on the inventory at the commencement of a lease, the number of difficulties at the end of the lease will be reduced. The motion refers to the "successful introduction" of tenancy protection in England and Wales, but one landlords organisation put it to me that the Westminster Government made a complete mess of the introduction of that scheme. If ministers here intend to go ahead with such a scheme, they should try to learn from what happened in England and Wales.
Despite what I have said about the introduction of the scheme in England and Wales, I understand that its operation has since proceeded relatively smoothly. Indeed, the latest figures show that less than 2 per cent of tenancies have ended with a dispute over the deposit.
A more general concern is over the need for politicians fully to comprehend the impact of extra regulations on the private sector. Scottish Conservatives are well aware of that impact, and we will not support regulations that will have a negative impact on costs and on business. Scottish landlords and agents are still trying to deal with the complexities of the landlord registration scheme and the regulations on hard-wired smoke detectors, and energy performance certificates are looming in January. Ministers should always exhaust all other options, such as the raising of awareness of good practice, before resorting to the imposition of regulations. Regulations must be proportionate.
The landlord accreditation scheme, which has been developed by the Scottish Association of Landlords and the Scottish Rural Property and Business Association, has the potential to drive up standards and to be a really positive thing for the rented sector. The Royal Institution of Chartered Surveyors operates a voluntary deposit scheme, too.
That is fine for the good landlords. Does the member have a remedy for the bad landlords, which is where the issue arises?
I will come to that in my conclusion.
I acknowledge the concerns that lie behind Claire Baker's motion, but ministers should tread with caution before burdening private individuals and companies with further regulations. I accept that there are a few bad apples in every barrel, but if we take a broad-brush approach, we could easily upset the running of good businesses, too. I look to the minister to assure me that he will proceed in an evidence-based way, in line with the scale and nature of the problem.
I congratulate Claire Baker on securing this important debate. I was president of the Scottish Union of Students almost 40 years ago and failure to return deposits was an issue even then. The issue is not new, but it now requires to be resolved.
We know that about 10 per cent of households are in the private rented sector and that roughly 70 per cent of tenants in that sector have to pay a deposit. As Claire Baker said, it is estimated that between £50 million and £80 million is now being held in deposits. The Housing (Scotland) Act 2006 allows the introduction of a deposit protection scheme. It is important that we now move forward.
The evidence from NUS Scotland that 33 per cent of students reported unfair deductions from their deposits or delays in their return is borne out by anecdotal evidence of which I am aware. Some 15 years ago, a member of my family was a resident in privately rented accommodation. At the end of one year, their £800 deposit was withheld in its entirety, until I intervened and threatened to take the gentleman concerned to court over the issue, at which point he said in exasperation, "But I've always kept the deposit." I hope that not many landlords still have that attitude today. As Robert Brown said, legislation is required to deal with the issue, because some landlords do not play fair.
The evidence from the NUS shows that in many cases there were unfair delays in the return of deposits as landlords held on to the money unnecessarily. Many of the students concerned will require to move on into other privately rented accommodation, for which they will have to pay another deposit. They cannot afford to delay their move.
Research by the University of St Andrews students association reports that about a quarter of students there experienced unjustifiable deductions or delays.
The minister could say that deposits should be returned with speed and that disputes about deductions could go to a form of mediation. I am sure that good landlords would welcome that, because there are occasions on which such disputes arise in the natural course of things, and it is only reasonable that a form of mediation should be available.
I think that Robert Brown said that we need to strike a balance between those who are engaged in the private rented sector, which is an important part of housing provision, and those who rent. At the moment, I suggest that we have not struck that balance.
We already have a scheme in England and Wales, which, with the caveats that Jamie McGrigor has expressed about its introduction, seems to be working extremely well. I can see absolutely no reason why Scotland should be any different in that respect. We have the opportunity to learn from England. We should grasp the nettle and the Government should introduce a scheme with considerable rapidity.
I congratulate Claire Baker on securing this debate on a tenant deposit protection scheme, which I am sure that most of us would agree is an important subject. My colleague Robert Brown has quite rightly outlined the plight of many university students. However, as the Liberal Democrat housing spokesperson, I am all too aware that it is not only students who are increasingly facing these problems but many people on low and moderate incomes who privately rent their homes.
I am not suggesting that all private landlords are unscrupulous or are likely to withhold deposits unfairly—far from it—but, as in many walks of life, it is the few who flout the rules who give the whole a bad image. I am sure that we could all think of examples of that.
I am grateful to the Association of Residential Letting Agents for clarifying the point about the bad apple in the barrel. However, despite outlining the benefits of a compulsory deposit scheme from the perspective of its members, it wrongly chastises all local authorities for their handling of the landlord accreditation and registration scheme, which was introduced by the previous Executive.
I have spoken directly with many constituents and with staff here in the Scottish Parliament who have had their deposits unfairly withheld and have had charges made for items far in excess of the reasonable replacement cost. That might not prevent people on a modest income from putting down a deposit on another property, but, for far too many people on a low income, that could mean the difference between continuing to have a roof over their head or not.
The deposits that are held on an individual tenancy can be several hundred pounds, and the impact of the loss of that money when a tenant moves can be catastrophic for many. According to Shelter Scotland, an estimated £50 million is currently held in deposits by private landlords in Scotland. If the figures from Citizens Advice Scotland are accurate, that figure is closer to £75 million.
Currently, the only route by which tenants who have had their deposits unfairly withheld can seek redress is through the small claims court. However, even that form of justice is totally impractical for people who are moving out of the area when they leave their tenancy—for example, people who are moving to another job, or students who have reached the end of a term or a course.
After many years of giving landlords an opportunity voluntarily to adopt more professional standards with regard to the service that they provide to their tenants, the previous Scottish Executive rightly introduced a compulsory landlord accreditation and registration scheme. That shows that, in some instances, we can reach a point at which only compulsion can provide the protection that individuals and families need.
For whatever reason, in the past few years there seems to have been a significant rise in complaints about many private landlords withholding deposits unfairly, and it is now clear that legislative action similar to that which was taken by the previous Executive in relation to the landlord accreditation and registration scheme is required.
The Liberal Democrats believe that the minister must follow the lead of other countries and introduce a compulsory tenant deposit scheme, which could be done under existing housing legislation. Further, if the Government is to salvage any credibility with Scotland's students, the minister must move to implement the best scheme possible—one that not only protects our students and low-paid residents in rented accommodation, but provides landlords with a clear settlement where, at the moment, no such clarity exists.
I congratulate Claire Baker on securing the debate. In doing so, I reflect on the frustrations of falling on hard times, since the words that were quoted earlier were said when I was in a position to make decisions rather than only urge the minister to do so.
It is important to congratulate groups such as Shelter, the NUS and Citizens Advice Scotland that persist in highlighting a range of issues that they want us to take up—I am grateful for the written and verbal briefings that were provided today. I also congratulate the constituents who continue to bring cases to us.
As Jim Tolson said, the problem with deposits affects not only students. The problem is largely invisible, but it can cause great difficulties for vulnerable members of our communities. It is right that the Government should respond to it in the context of communities issues.
In a previous life, I was a schoolteacher, and I am always looking for object lessons. The proposal in the Housing (Scotland) Act 2006 for a mandatory deposit scheme was an object lesson in how the Parliament can work effectively. We hear a lot of talk about consensus. There is a huge amount of rewriting of the history of this Parliament, but we built consensus around a number of significant issues. The proposal was not originally included in the legislation as introduced to Parliament. It was the work of committees and members of all parties, supported by groups outside the Parliament, that put it on the political agenda.
Members of all parties reflected on the scheme, and Christine Grahame, Tricia Marwick, Lib Dems and Labour members—I cannot remember the Tory position—all pursued the matter with me as the then Deputy Minister for Communities. They raised it with me not to gain party advantage, but because they believed that it needed to be done. At stage 2, the decision was taken that the proposal as it had emerged was to be supported. Nobody claimed victory or said that there were U-turns, but a little bit of political business was done to ensure that we could take it forward. Acting in that way was important, because it gave a message about the importance of the Parliament's walls being breached by those who really understood how policy should be developed.
I hope that SNP back benchers will recognise their role in challenging their own front bench members. If I were still the minister, and if I were operating at the pace of the current Minister for Communities and Sport, I would not wait to be chided by the Opposition to act—Labour's own back benchers have a record of doing that. It has been said that we need research and consultation, but there is concern about the pace. I understand that the working group that was set up has met only once since May. I understand the need for research, but there must be action.
The argument has been made that we already have landlord accreditation and registration, but we cannot be in a position where the argument is that if everything cannot be done, nothing can be done. Mr Maxwell has my permission to disregard the commitments that I have made and to act more quickly. Stuart McMillan identified problems with the scheme down south—in that case, other options should be consulted on. We need a driver and a commitment.
The private sector has an important role to play, particularly in times of credit crunch, in meeting housing needs and homelessness targets. The landlord sector needs to be open and transparent, and we want the sector itself to recognise the damage that has been done to its reputation. Good landlords have nothing to fear.
I urge the minister to recognise that simple steps should be taken, such as bringing forward a timetable and committing to a mandatory scheme. We will ensure that there is consensus in the Parliament in dealing with consultation in parliamentary committees and in our communities. That will give students and families confidence as they make decisions about their accommodation ahead of the academic year. The important small step of building consensus in the Parliament will make a difference in our communities. I urge the minister to make the commitment tonight.
I congratulate Claire Baker on securing this worthwhile debate.
As several members have remarked, everyone has an anecdote about someone whose rent deposit was withheld. Other members, like me, may have dealt with individual cases in their constituencies.
We have heard about the landlord accreditation scheme. I was recently approached by a group of students who were with an accredited landlord who refused to repay their deposit. It took a letter from me—sadly—to resolve the situation, but why did I have to write? My own constituency has a large student population, and commonly it is students—who often already are burdened financially by the costs accrued from attending university—who are hardest hit by the unjust retention of a deposit.
I recently wrote to all the Scottish universities, and almost certainly to most of those who are represented in the public gallery today and to other stakeholders, regarding the issue. Of course, they all had stories to tell. Opinion was unanimous: the unjustified withholding of tenants' rent deposits is a serious problem.
I am sure that many of the members who are in the chamber will have taken the time to consider the NUS report "Brick by Brick: the state of student housing in Scotland 2007", many of the figures in which are truly startling: 25 percent of students surveyed reported the unfair withholding of their deposits. That amounts to hundreds of thousands of pounds every year, and if repeated across the entire rental sector it could run into millions.
The 2001 survey that led to the introduction of a mandatory scheme in England stated that 21 per cent of private tenants across the sector had had a deposit withheld unfairly. There is no reason whatsoever to believe that the figure is any different in Scotland. Indeed, as the private rental sector has expanded significantly since 2001, the problems might be even more widespread. Richard Simpson talked about the situation 40 years ago—I bet it is much greater now.
There are several well-documented problems with the current system, and neither landlord nor tenant is adequately protected. Currently, the only recourse for tenants if there is a dispute over the withholding of a rent deposit—if they do not have an MSP—is the small claims court, where the average fee for the recovery of a £750 deposit is around £44. If the landlord disputes the claim, a hearing is required, which can be daunting, particularly for young people, students and the vulnerable. It can take months to get a judgment and appeals can cost hundreds of pounds. The average Scottish student can ill afford to spend that time and money. It is also worth noting that delays might cause particular problems for students from other parts of the United Kingdom and overseas, who might have to return home and simply do not have the time to fight a court case to get their deposit back.
In the past, the main barrier to the introduction of a mandatory scheme in Scotland was the lack of a dedicated body of figures to support the widespread anecdotal evidence. Now, however, with the release of the NUS report, we finally have a solid basis on which to build the case for a scheme. The current situation is unnecessary and unsustainable, and the benefits of the scheme in England are self-evident. I hope that the Scottish Government will use the Housing (Scotland) Act 2006 to introduce a mandatory tenancy deposit scheme. I hope that the minister will give us some positive guidance on whether he will do that in the near future.
I congratulate Claire Baker on securing the debate.
I listened carefully to the debate and appreciate members' concerns about the impact that unfairly withheld tenancy deposits can have on tenants in the private rented sector. Members asked me when the Scottish Government will use the provisions in the Housing (Scotland) Act 2006 and require landlords to sign up to a mandatory deposit protection scheme. However, it is by no means clear that such a scheme would be the most cost-effective or efficient way of dealing with the problem of unfairly withheld deposits in Scotland. The Scottish Government is considering the matter.
Much has been said this evening about the number of tenants, and particularly students, who face problems with unfairly withheld deposits. I am aware of the research that a number of organisations have carried out in the area, including the NUS "Brick by Brick" report. It is worth pointing out that the NUS research asked students whether any of their deposit had been withheld rather than whether it had been unfairly withheld. That distinction is important and it underlines the need for a balanced approach that is underpinned by robust evidence.
Members mentioned the success of the mandatory schemes in England and Wales. The Scottish Government is interested in the impact of those schemes, but we believe that the right course of action is to assess the outcome of any formal evaluation of the schemes. There has been no formal evaluation to date and the Scottish Government will not draw conclusions based on headline figures without a more detailed understanding of whether the schemes have an impact on the number of deposits that are unfairly withheld.
It is also the case that there are considerably more landlords and agents in England and Wales to support the costs of a mandatory scheme. The schemes in England and Wales are self-financing. They rely on income from the interest that is accrued against the deposits that are held in the custodial scheme or from the fees that landlords and agents pay to join the insurance-based schemes. Clearly, there are risks to the Government in relation to whether a custodial scheme in Scotland could become self-financing.
The two insurance-based schemes in England and Wales charge fees that range from £58 to £1,600 for landlords and agents. We need to take into account the fees that landlords in Scotland already pay as part of the mandatory landlord registration scheme and for the licensing of houses in multiple occupation. We would be concerned to ensure that the costs were not passed on to tenants.
I am concerned that the minister suggested that the Government is inhibited by the timescale for the evaluation of the schemes in England and Wales. Is it not possible for the Government to consult on a series of options? That would give the proposal momentum and drive it forward. The minister seems to be posing difficulties without offering solutions.
I will come to many other points, but the fact is that the scheme in England has not been formally evaluated. Many members said that it is a shining example that we should follow, but without a formal evaluation it is a bit early to say that.
The sustainability and financing of the proposed mandatory scheme in Scotland need to be assessed carefully in the light of the evidence on the extent to which there is a problem with unfairly withheld tenancy deposits in Scotland. The previous Administration shared that view. When Johann Lamont, in her role as Deputy Minister for Communities, gave evidence during the passage of the Housing (Scotland) Bill, she said:
"We will not introduce any scheme whose cost we consider disproportionate."—[Official Report, Communities Committee, 5 October 2005; c 2502.]
Housing issues in Scotland are different from those in the rest of the United Kingdom, so we need to look for the right solution for Scotland. Members will be aware that a number of initiatives are under way in Scotland with the aim of increasing standards in private rented accommodation. Those include landlord registration and the repairing standard, neither of which exists in England and Wales.
All landlords in Scotland letting to three or more unrelated people require an HMO licence. In addition, our new national landlord accreditation scheme gives us an opportunity to promote good practice across the board in relation to tenancy management in general and not just tenancy deposits. In particular, landlord registration allows local authorities to take account of any evidence that landlords or letting agents have unfairly withheld their tenants' deposits. I encourage any tenants who experience problems with their landlord to contact the relevant local authority landlord registration team. Local authorities have a range of powers to take action when they are concerned about a landlord's practice.
The recently launched national voluntary landlord accreditation scheme will also help to drive up standards by promoting best practice in private letting and by providing training, advice and support for landlords, including training on tenancy deposit management. Over time, those initiatives should help to tackle any landlords or letting agents who are found to have unfairly withheld their tenants' deposit. It is that holistic approach to improving standards in private renting in the round—not just in tenancy deposits—that will make a difference in Scotland.
The Government is taking steps to gather evidence on the scale and nature of unfairly withheld deposits. We are working with a stakeholder group that is currently examining the issue in more detail. The group includes members from the NUS, Shelter, the Convention of Scottish Local Authorities, private landlords and others. The group agreed that it was important to develop an evidence base on the scale and nature of unfairly withheld tenancy deposits in Scotland.
I may have the wrong information, so will the minister clarify when the group last met and when it will meet again?
The group last met in June last year. A meeting was offered to the group in September, but its members decided that they could deal with the issues at hand through e-mail correspondence rather than a meeting. The correspondence was about the nature of the questions for the surveys. The findings from the surveys will be available later this year and will prevent the introduction of any scheme whose costs we consider disproportionate to the extent of the problem.
I will try to cover some points that were raised by members. Jim Tolson said that there was no clarity on tenancy deposit management in Scotland. I must disagree: national core standards are clear, and Landlord Accreditation Scotland will work to promote them through training, advice and guidance.
Johann Lamont asked about the timetable. As I have already said, the survey findings will be available later this year. The working group will consider them and take a view on the basis of the evidence.
Claire Baker covered a number of points in her remarks. I do not think that she was right that there is acceptance of a poor system. The purpose of landlord registration is to drive up standards and tackle poor practice. She also spoke about the previous Executive committing to introduce a scheme by 2008. That is not true. The previous Executive said that it wanted to examine the extent of the problem and that it would perhaps consult in summer 2008.
Claire Baker also said that, during the passage of the 2006 act, concerns were expressed about landlord registration not tackling the problem of withheld tenancy deposits. The Deputy Minister for Communities at the time advised the Communities Committee that the Executive would want to consider the impact of registration and other initiatives as part of its approach.
Will the minister give way?
The minister is just winding up.
Jamie McGrigor said that there was only a 2 per cent dispute rate in England. That is true, but only two thirds of landlords have joined the scheme. I suggest that the good landlords have joined the scheme and that it is the fact that the bad landlords have not joined that has resulted in a low dispute rate.
It is clear that we do not have the full evidence that would allow us to proceed at the moment. The Government's approach is right for Scotland. We are collecting evidence on the scale and nature of unfairly withheld tenancy deposits in Scotland. We are also considering the viability of other options for improving deposit management, including existing good practice and the impact of initiatives such as landlord registration and the national voluntary accreditation scheme. That is the correct approach to take, and I believe that the stakeholder group that is considering the issue should examine all options suggested by members before making recommendations.
Meeting closed at 18:29.