Colvin Houston Ltd, a lettings agent in Scotland, was fined £750 (reduced to £500 for an early plea) after becoming the first to be prosecuted in connection with the Tenancy Deposit Schemes (Scotland) Regulations 2011 that required all landlords (including England and Wales) to register deposits. The legislation was set up to ensure deposits were ring-fenced in independent tenancy deposit schemes and protected by third parties until such time as the tenant vacated the rented property.
North Ayrshire Council said the landmark ruling at Kilmarnock Sheriff Court could now have a “massive impact” for people renting properties across the UK
The deposit legislation primarily places the responsibility for securing deposits on landlords. However, the Consumer Protection From Unfair Trading Regulations (CPRs) were used in this instance to hold Colvin Houston Ltd responsible for the deposit they took on behalf of their client, the landlord.
In this prosecution, North Ayrshire Council’s Trading Standards team argued that landlords were consumers rather than professionals. Consequently, in failing to secure the deposit, the letting agent had committed the offence of unfair trading by “failing to meet the standard of skill and care that would reasonably be expected” of a trader in its field of activity, and hence their practice was deemed “unfair as it failed to meet the standard of professional diligence”.
It should be remembered that the CPRs apply equally in England as well as in Scotland and so a similar prosecution could be pursued South of the Border. Routine failure to protect deposits is something that agents should not be involved with and is likely to attract prosecution.