Renting out a property in Scotland is not just about income; it's about safeguarding your valuable assets. To ensure a smooth tenancy and protect your investment, setting up a security deposit is vital. This guide is here to help landlords in Scotland navigate the key steps and considerations in establishing a security deposit for a rental property in a friendly and trustworthy manner.

Initial Documentation

Once you've chosen a tenant, you have to deal with the paperwork and deposit. Give a copy of the tenancy agreement to your tenant and keep one for yourself and make sure every copy is signed by everyone.

You should also give your tenant a copy of your correct information notes, either digitally or on paper. We suggest to either ask your tenant to sign a receipt or reply to you by email saying they've received the tenancy agreement and notes.

You should also give your tenant:

  • An Annual Landlord Gas Safety Record certificate
  • The Energy Performance Certificate
  • Electrical safety certificates
  • Information on how to report repairs and emergencies
  • Rent and deposits

Before the tenant moves in, arrange the deposit and the first rent payment with them.

When you collect a tenancy deposit, you must lodge it with a third party tenancy deposit scheme. The scheme protects your tenant's deposit until it's due to be repaid. There are 3 schemes you can register with:

You have to do this within 30 working days of the tenancy starting. Where you and the tenant agree that they will pay the tenancy deposit in instalments, you (the landlord) should lodge each instalment within 30 working days of receiving them.

You should also tell your tenant which Tenancy Deposit Scheme their deposit is in and the other information you are required by law to provide. This will help sort out any disputes when the tenancy ends.

Telling the council

Once all the paperwork is signed, give your council your tenant's details and their moving in date.

Let your tenant know the council has their details for council tax purposes, and tell them what council tax band the property is in so they know how much to pay.

Understanding Legal Requirements and Regulations

First things first: familiarise yourself with the legal landscape around security deposits. In the UK, security deposits are regulated by laws such as the Housing Act 2004. Compliance is crucial to prevent legal troubles. Key points include:

  • Tenancy Deposit Protection (TDP): By law, landlords must protect the deposit in a government-approved scheme within 30 days of receiving it. Options include Deposit Protection Service (DPS), MyDeposits, and Tenancy Deposit Scheme (TDS).
  • Prescribed Information: Within 30 days, landlords must provide tenants with necessary deposit details and how to resolve disputes within the chosen TDP scheme.
  • Inventory and Check-In Reports: Conduct a detailed inventory and check-in report to document the property's condition at the tenancy's start. This documentation is vital for potential deposit disputes.

Determine the Amount of the Security Deposit

Deciding the deposit amount requires careful thought. Factors to consider:

  • Property Value: Reflect the property's value and potential repair costs in the deposit.
  • Rental Market: Research standard deposit amounts in the local rental market to set a competitive deposit.
  • Tenant Profile: Consider the tenant’s background, previous landlord references, and financial stability to adjust the deposit if needed.

Communicate Clearly with Tenants

Transparency is key. Clearly explain the deposit amount, its purposes, and its terms in the tenancy agreement. Ensure the agreement includes clauses about the TDP scheme and deposit return procedures.

Conduct a Thorough Check-In Process

Before the tenant moves in, conduct a detailed check-in process. Document the property's condition with photos, videos, and notes to establish a baseline for end-of-tenancy comparisons.

Use a Government-Approved TDP Scheme

Select a TDP scheme and provide the tenant with details about the chosen scheme and dispute resolution options.

Keep Detailed Records

Maintain detailed records of every deposit-related interaction, protection confirmation, communication, receipts for repairs, and the check-out report.

Deductions and Disputes

Make deductions for specific reasons and provide evidence for each. In case of disputes, the TDP scheme acts as a neutral party to assess and resolve disagreements.

Returning Deposits

Promptly return the deposit, minus deductions, at the tenancy's end. Follow the TDP scheme’s guidance for a hassle-free process.

Keep Learning and Adapting

Stay updated on landlord-tenant laws. Join associations, attend workshops, and seek legal advice to stay compliant.

Seek Professional Advice

For new landlords or complex situations, seeking professional advice can prevent costly mistakes.


Establishing a security deposit in Scotland involves legal adherence, clear communication, and meticulous documentation. Following these steps and regulations ensures protection, maintains positive relationships, and guarantees a smooth tenancy. Flexibility and open communication are vital for success as every situation is unique.