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Regulations governing the approval of a national Tenancy Deposit Scheme were laid in the Scottish Parliament. The regulations are expected to become law in March.

The Scottish Government estimates that between 8,000 and 11,000 tenants annually have £3.6 million of their deposits wrongly withheld.

Once operational, the tenancy deposit scheme will be free for landlords and letting agents to participate in. Tenants will no longer have to take legal action to seek recovery of a wrongly withheld deposit.

It will provide access to a free and independent dispute resolution service, where agreement over the return of a deposit cannot be agreed by the tenant and landlord.

Alex Neil said:

"For some time there has been a rising chorus of disapproval about unfairly withheld tenancy deposits. This Government is taking action to ensure tenants receive a better deal.

"The majority of landlords behave responsibly and so it is important that we tackle those landlords who continue to tarnish the image of the private rented sector.

"The new regulations are streamlined with the emphasis on creating a cost effective approach to safeguarding tenancy deposits."

Liam Burns, President of National Union of Students Scotland said:

"The creation of a tenancy deposit scheme is something NUS Scotland has long campaigned for and will be good for students, tenants and the vast majority of reputable landlords.

"Far too often we hear of students struggling to get their money back due to landlords treating deposits as a defacto fee rather than a safety net for damage to properties. On average, students lose £200 through unfairly withheld deposits.

"Rapid return of deposits, professional mediation when disagreements arise and scrutiny where a minority of landlords continually make poor decisions should mean that the playing field is now levelled for tenants in a far more accessible way than the courts.

"Now we must make sure that the scheme protects the interests of tenants and the reputation of the sector. We look forward to continuing to work with the Government and all political parties to ensure the final proposal is one that has the best interests of students in mind."

Gordon MacRae, Head of Communications and Policy at Shelter Scotland, the housing and homelessness charity, said:

"We welcome this scheme which will benefit both tenants and landlords alike by introducing an efficient and fair system to regulate the, at times, contentious issue of tenancy deposits.

"Shelter Scotland has long-campaigned for this scheme and the challenge now is to ensure the Scottish Parliament moves it forward for implementation as soon as possible."