Tenancy Deposit Protection Scheme

Speech by Robert Brown on Wed 18th Jun 2008

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.

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Related Link:

Tenancy Deposit Protection Scheme.