Letting agents who fail to protect tenant deposits for consumer landlords could face fines and a criminal prosecution following a landmark court case.
Colvin Houston, a letting agent in Largs, Ayrshire, was fined £500 after pleading guilty to unfair trading by failing to meet expected professional standards.
The case is the first prosecution under Consumer Protection From Unfair Trading Regulations which apply to the entire UK, not just Scotland.
As a result of the case heard at Kilmarnock Sheriff Court, letting agents with consumer landlord clients are as responsible for protecting tenant deposits as the landlords.
The court decided that if the deposit was collected for the landlord and was not protected, the letting agent should have advised the landlord of their legal obligations and taken steps to safeguard the money.
However, the decision draws a distinction between the letting agent acting for ‘consumer’ and ‘professional’ landlords.
Consumer landlords are those letting out a single property or a home they have previously lived in or inherited, who the court held may not be aware of their legal obligations to tenants.
Scott McKenzie, Senior Manager Protective Services North Ayrshire Council, said:
“Renters are disadvantaged and may find it hard to move into a new property because the whereabouts of their initial deposit is unknown.
“Trading standards will work closely with our colleagues in housing and licensing to ensure all rent deposits are in secure schemes. We are sharing our experience with other councils in Scotland.”
Judith Houston, a director, with Colvin Houston, explained that as soon as the situation became apparent, steps were taken to rectify the error.
The court also reduced the fine from £750 to £500 due to the letting agent making an early guilty plea.