Holding Deposits and Admin Fees in Scotland: What Landlords Cannot Charge

If you have ever asked a prospective tenant for a non-refundable holding fee to take a property off the market, that payment was illegal in Scotland. Unlike England — where the Tenant Fees Act 2019 introduced a regulated holding deposit capped at one week's rent — Scotland has had an outright prohibition on premiums and fees for decades.

The Legal Basis: Section 82 of the Rent (Scotland) Act 1984

Section 82 of the Rent (Scotland) Act 1984 makes it unlawful to demand or accept any premium, administration fee, or non-refundable payment as a condition of granting, renewing, or continuing a tenancy. The ban covers:

• Holding fees or reservation deposits to take a property off the market
• Administration charges for processing a tenancy application, running reference checks, or preparing a lease
• Key deposits or any non-refundable sum on top of the tenancy deposit
• Renewal fees when a tenancy continues past an initial period

This is not a recent reform. The prohibition has been in force continuously since 1984, and it applies to every Private Residential Tenancy created under the 2016 Act as well as legacy Assured and Short Assured Tenancies from the Housing (Scotland) Act 1988.

What About Advance Payments?

A landlord can accept an advance payment before the tenancy starts, but only if it is explicitly designated as one of two things:

1. Pre-payment of contract rent — the first month's rent paid early, applied in full to the rental account
2. An advance deposit payment — credited toward the total tenancy deposit amount

If designated as deposit money, the advance must be counted within the two-month rent cap under Section 90(3) of the 1984 Act and lodged with an approved custodial scheme within 30 working days of the tenancy start date. The tenancy deposit, including any advance deposit contribution, cannot exceed two months' rent.

The distinction matters because a non-refundable payment to reserve the property is a prohibited premium under Section 82. Merely calling it an "advance deposit contribution" does not make it lawful: the payment must actually be credited toward the tenancy deposit, remain within the two-month-rent cap, and be lodged with the scheme.

How This Differs From England

England introduced a specific holding deposit regime through the Tenant Fees Act 2019:

A landlord operating properties in both jurisdictions needs to apply each country's rules to the right tenancy. The English holding deposit provisions do not extend north of the border.

The Deposit Cap and Fees Together

Section 90(3) caps the tenancy deposit at two months' contract rent. Section 82 prohibits any other charge. Together, they mean the maximum a landlord can collect from a tenant at the start of a tenancy is:

• Rent (first month or period, as agreed in the lease)
• A tenancy deposit of up to two months' rent

Nothing else. No cleaning fee, no pet surcharge above the cap, no inventory fee, no checkout fee. If the deposit is set at two months' rent, any extra fee collected is prohibited under Section 82; an extra amount treated as deposit would also exceed Section 90(3)'s cap.

Letting agents sometimes charge tenants directly for reference checks or inventory reports. Under Section 82, these charges are equally unlawful when they are a condition of the tenancy being granted, regardless of whether the landlord or the agent collects the payment.

What Happens If You Charge a Prohibited Fee

Section 82 prohibits the charge, while the 2011 Regulations' penalty mechanism (up to three times the deposit) specifically targets deposit-lodging and prescribed-information failures.

The practical risk for most landlords is smaller than the headline tribunal penalties for failing to lodge a deposit — but collecting a prohibited fee in writing creates a paper trail that a tenant's representative will use as evidence of a broader pattern of non-compliance if other issues arise during the tenancy.

The Compliant Approach

Collect the deposit (up to two months' rent) and the first rental payment. Lodge the deposit with SafeDeposits Scotland, MyDeposits Scotland, or Letting Protection Service Scotland within 30 working days. Serve prescribed information under Regulation 42. Charge nothing else.

For a complete workflow covering every step from deposit receipt to lodging, prescribed information, and eventual return, see our Tenancy Deposits in Scotland guide.

See more Scotland guides →