Agent kept one week Holding Deposit when new tenant called off?

Agent kept one week Holding Deposit when new tenant called off?

0:02 AM, 18th September 2024, About 3 months ago 7

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Hello everyone, My letting agent found a tenant for me and they took a one-week Holding deposit from the new tenant.

The tenant then pulled out at the last minute, which created a rental void for me.

When I asked the letting agent about the one-week Holding deposit they received to cover my void period, they said they would keep it themselves to “cover their cost” for marketing and letting it twice.

Is that reasonable at all?

Mike

Editor’s Note: Tenant Fees Act

You may ask a tenant to pay to demonstrate a commitment to rent the property whilst referencing checks take place. You cannot ask a tenant for a holding deposit which is more than one week of the total rent for that property.

If you ask for a holding deposit which is above one week’s rent, this will be a prohibited payment.

You must refund the holding deposit where a tenant later enters into a tenancy agreement, the landlord decides not to rent the property, an agreement is not reached before the ‘deadline for agreement’ (and the tenant is not at fault), or if you impose a requirement that breaches the ban and/or act in such a way that it would be unreasonable to expect a tenant to enter into a tenancy agreement with you (i.e. including unfair terms in a tenancy agreement or harassment etc.)

The ‘deadline for agreement’ for both parties is usually 15 days after a holding deposit has been received by a landlord or agent (unless otherwise agreed in writing).

You can only retain a tenant’s holding deposit if they provide false or misleading information which reasonably affects your decision to let the property to them (i.e. calls into question their suitability as a tenant, this can include their behaviour in providing the false or misleading information), they fail a Right to Rent check, withdraw from the proposed agreement (decide not to let) or fail to take all reasonable steps to enter an agreement (i.e. responding to reasonable requests for information required to progress the agreement) when the landlord and/or agent has done so.

Where you wish to retain the holding deposit, you must set out in writing the reason for this within 7 days of deciding not to enter the agreement or the ‘deadline for agreement’.


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Graham Bowcock

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10:23 AM, 18th September 2024, About 3 months ago

As an agent I would expect to hold the deposit to cover the work done in referencing and setting the potential tenant up.

Technically you've not had a void as there was no tenancy agreement in place; you have had a delay in sourcing a new tenant.

Prior to the tenants' fee ban, most agents charged tenants an admin fee to cover their costs. Part of the reason was that it gave the tenant some engagement - stops them maming multiple applications then chossing the one they like the most.

Ideally the agent should have agreed with you in advance what happens to holding deposits, but if you want it payting to you the agent may wnat to charge you for the aborted application.

Mark Smith

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12:11 PM, 18th September 2024, About 3 months ago

AS a Landlord I would expect all agent fees to be upfront and in the agency contract. IN law a holding deposit collected on behalf of the landlord - belongs to the tenant - and then if it is forfeit it belongs to the landlord.

It is my opinion that is if an agent retains it to cover their costs without the landlords consent then they are in fact collecting an illegal fee to cover their costs from the tenant.

If they have additional fees to cover costs when they have recommended an unsuitable tenant resulting in a FAILED TENANT find it should be explicit what their charges are - and they should be clearly charged to the landlord separately and not illegally collected form the tenant.

I would carefully check your agency agreement - and if they are not full covered this may provide the excuse you need to get out of a contract with yet another a greedy agent who is clearly not acting in your interest.

Cider Drinker

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13:59 PM, 18th September 2024, About 3 months ago

Reply to the comment left by Graham Bowcock at 18/09/2024 - 10:23
And this is why I’d never use an agent.

SAM UK

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17:51 PM, 18th September 2024, About 3 months ago

Make agents great again!

SimonP

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7:36 AM, 22nd September 2024, About 3 months ago

This scenario is exactly what happened with a prospective tenant and my own letting agents, LEADERS.

The prospective tenant gave false/incorrect information, failed the financial checks and therefore lost the Holding Deposit.

But LEADERS then refused to hand over the Holding Deposit to me and maintained that it was their right to keep all of it for themselves. Moneygrabbers!

Graham Bowcock

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8:39 AM, 23rd September 2024, About 2 months ago

Reply to the comment left by SimonP at 22/09/2024 - 07:36
If they want to do that then it should be in their terms of business.

havens havens

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17:32 PM, 23rd September 2024, About 2 months ago

According to the Tenant Fees Act, that deposit is supposed to show the tenant's commitment while their references are checked. If the tenant backed out without any fault on your part, you should get that deposit back.
The agent shouldn't keep it just to cover their marketing costs. They can only hold onto it if the tenant gave false info or didn’t take the necessary steps to finalize the agreement.
You should ask the agent for a written reason for keeping the deposit. If they can’t justify it within seven days, you should definitely get your money back. If they still don’t cooperate, you might want to seek further advice or file a complaint.

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