In July of this year a Scottish letting agent pled guilty to an offence under the Consumer Protection from Unfair Trading Regulations (CPRs) 2008. What was perhaps surprising was that the “offence” committed by the letting agent was the failure to lodge deposits with an approved tenancy deposit scheme on behalf of one of their landlord clients.

In terms of the Tenancy Deposit Scheme (Scotland) Regulations 2011, a landlord has a duty to pay any deposit received from a tenant into an approved tenancy deposit scheme within 30 working days of the commencement of the tenancy to which the deposit relates. The regulations themselves provide a remedy if the deposit is not lodged. This remedy is at the instigation of the tenant themselves and is directed against the landlord.

However, a large proportion of landlords employ letting agents to manage their properties for them and to ensure that they, and their properties, comply with current law and practice. We have become familiar with claims by tenants and former tenants against landlords for breach of duty regarding deposits, even where landlords have employed professional agents. Apart from an awkward discussion with the landlord and at very least a contribution to costs and the penalty awarded against the landlords, agents have tended not to face any direct penalty themselves.

Following a prosecution of a letting agent, led by North Ayrshire Trading Standards, that has potentially changed. In what is understood to be the first investigation of its kind, the local authority’s housing department engaged with its local Trading Standards office that, in turn, was advised by specialist lawyers at the Competition & Markets Authority in London.

The approach adopted by Trading Standards was to seek to prove that the letting agent in question knew about the requirement to pay deposit money into an approved tenancy deposit scheme but had not done so; and that paying money into an approved scheme on behalf of their landlord clients was a requirement of “professional diligence” for letting agents, and failure to do so was a breach of that duty and therefore a criminal offence. Whilst there was an attempt by the letting agents to argue that the landlord was not a “consumer” for the purpose of the CPRs, this was rejected by the court and led to the agents pleading guilty to the offence.

What is interesting is that, whilst this case related to the failure to pay a deposit into an approved scheme, the application of the CPRs is not limited to deposits. It is understood that Trading Standards are looking at applying the same approach to other breaches of what they view as “honest market practice” or “good faith” in the private rented sector, such as the continued charging of premiums by some lettings agents (which is a criminal offence in itself), and potentially the failure to advise landlord clients on basic safety requirements for private tenancies such as gas or electrical safety.