Lack of rules over unclaimed money bring tenants’ deposits scheme under fire

A Scottish government-approved scheme meant to protect tenants’ deposits from bad landlords is facing criticism over concerns the Crown will pocket £1 million in unclaimed deposits in the next three years.

Those administering the tenancy deposit regulations in Scotland are already sitting on unclaimed cash totalling £400,000.

The schemes were brought in to tackle the issue of landlords and letting agents who withhold deposits from tenants unfairly.

But with the unclaimed monies continuing to grow and the legislation lacking rules for them, Scotland’s only operator of the scheme, SafeDeposits Scotland, said it has been legally instructed that after six years the money will become res nullius and fall to be consigned to the Queen’s and Lord Treasurer’s Remembrancer. The figure in 2018 is predicted to be £1 million.

Chief executive of SafeDeposits Scotland, Jennifer Paice, has called for clarity in the law over the unclaimed deposits and said the money should be used to improve the private rental market.

This call has been supported by student leaders, with those in education forming a large contingent of people living in private rented accommodation.

Ms Paice’s organisation is the only not-for-profit tenancy deposit scheme in Scotland. Any surpluses it generates are gift-aided to the SafeDeposits Scotland Trust – a grant-giving charity designed to promote education, training and best practice in the Scottish private rented sector.

She said the legislation – introduced in 2012 – did not foresee deposits going unclaimed as no one thought it would be an issue.

She added: “We were not expecting this scenario. No-one was. But we have since taken advice from our own solicitors over what happens as there are no provisions in the scheme.

“We have been told that like many other unclaimed assets it reverts to the Crown. As a not-for-profit we cannot keep it.

“What we are now asking the government for is a change to the law, where the unclaimed cash goes into a trust to help improve the private sector.

“That is everything from supporting tenants’ groups, making all involved in the sector aware of legislative changes and generally helping professionalise the private rented sector.”

Landlords must register with a scheme and lodge a tenant’s deposit there within 30 working days of the tenancy commencing.

Gordon Maloney, president of NUS Scotland, said: “It is really worrying that such a significant amount of deposits are going unclaimed, a sign that tenants either do not know their rights or are not able to exercise them.

“When tenants continue to see rents increasing by scandalous amounts, and the Scottish private rented sector is in need of investment and reform, not least regulating the cost to tenants, the last place unclaimed deposits should be going is into the UK government’s bank account.

“Given the huge amount of deposits that are going unclaimed, and when the sector remains in need of investment, we must see a change in the way things work so that this money can remain in Scotland and more can be put into services that benefit tenants.”

Housing minister Margaret Burgess said: “The laws governing the schemes allow tenants to reclaim money owed to them at any time after the end of a tenancy. There is no statutory time limit.”