The landmark ruling against Colvin Houston Ltd at Kilmarnock Sherriff Court – which was triggered by North Ayrshire Council’s Trading Standards team – could now have a massive impact for people renting properties across Scotland.

It was the first time a letting agent has been prosecuted since the Tenancy Deposit Schemes (Scotland) Regulations 2011 was introduced five years ago.

The legislation was set up to ensure deposits were ring-fenced in independent tenancy deposit schemes and protected by third parties until they were due to be repaid.

These schemes were established to stop tenants from losing deposits unfairly – but until this week had never been used against letting agents.

Housing legislation primarily places the responsibility for securing deposits on landlords. But Consumer Protection legislation was used in this instance, a first, to hold a Letting Agent responsible for the deposits they took on behalf of their landlords.

Colvin Houston Ltd pleaded guilty to the charge relating to two specific deposits, amounting to £925, which had not been paid into a required Tenancy Deposit Scheme. The company were fined £750 which was reduced to £500 for an early plea.

Now that there is legal precedent, establishing criminal liability under Trading Standards legislation, work can be continued throughout Scotland in regard to the 40 per cent of deposits that are currently not securely held in a regulated Tenancy Deposit Scheme.

Scott McKenzie, senior manager of protective services at North Ayrshire Council, said: “This is a very good example of how services within local authorities can work together to find answers to problems that cause real harm within communities.

“Renters are disadvantaged and may find it hard to move into a new property because the whereabouts of their initial deposit is unknown.

“Trading Standards will continue to work more closely with our colleagues in Housing and Licensing, to ensure all rent deposits are in secure schemes. We are now sharing our experience with all other councils in Scotland.”

Trading Standards used the Consumer Protection from Unfair Trading Regulations 2008 legislation to press charges against Colvin Houston Ltd. They argued that in this instance that the landlords were consumer landlords rather than a professional landlord. As they had not secured the deposits, the letting agent had committed the offence for 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.

Jen Paice, chief executive of SafeDeposits Scotland, said: “The majority of landlords and letting agents act responsibly by using the Scottish Government-backed tenancy deposit scheme, however this case raises an important point which all landlords need to be cognisant of.

“The statutory duty to protect a deposit is on the landlord even when a letting agent is used so it’s essential to seek confirmation that this is happening and alert the authorities where it is not. SafeDeposits Scotland manages the majority of private rental deposits in Scotland and, as the only body to be based locally, we hear first-hand about the success and benefits of the scheme in providing assurance for tenants and landlords alike.

“We greatly value Trading Standards in North Ayrshire Council’s work in bringing this case to court and hope that it will go a long way to ensuring the minority of letting agents and landlords who don’t currently comply with government regulations quickly address this.”