The Association of Residential Letting Agents (ARLA) is disappointed that a recent review into the Scottish private rented sector failed to acknowledge the requirement for Scottish deposits and client funds to be protected by a formal system.

This is despite the review itself recognising that “between £3.7m to £6m is considered to be unfairly withheld each year” with between 13,000 and 19,000 tenants affected.

Ian Potter, Operations Manager of the ARLA, said that it was necessary to bring about sweeping change to protect consumers’ money – and their interests – in these hard times.

Mr Potter said: “This research has highlighted a further area of weakness in protection of the consumer in Scotland: if a letting agent or private landlord gets into financial difficulty – or even goes out of business – the funds paid to them by clients (either tenants or landlords or both) could be in jeopardy.

“As it currently stands in Scotland, a tenant or landlord has no guarantee that a deposit is safeguarded. South of the border it is compulsory for clients’ monies to be held by a government-regulated deposit protection scheme – ARLA would urge that the Scottish Government follow suit.

The review also highlighted that the credit crunch has produced an increase in supply of rental properties with homeowners unable to sell.

Ian Potter said: “The credit crunch is increasing the number of what might be called ‘reluctant landlords’ onto the market. The Government must ensure that these inexperienced landlords and the lettings agents that will spring up to serve them are monitored closely.

“Whilst there is a registration scheme for landlords in Scotland, this does not actually protect tenants financially because the landlord can only be deemed unfit to let houses after a tenant has lost out.

“There is also a lack of regulation for agents in Scotland which poses great risks to consumers. ARLA is calling on Holyrood to pursue for the regulation of all Scottish agents, establishing a recognised minimum standard regulated by statute, to help bring as much confidence to the market as possible.”