Is this a deposit and can it be kept?

by Readers Question

9:03 AM, 9th August 2016
About 2 years ago

Is this a deposit and can it be kept?

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Is this a deposit and can it be kept?

We paid a £400 holding deposit (half of the full deposit amount) for a room a few days ago. The room is currently still in use and will be in use by the current tenants until the end of the month.duck

We received a receipt (with no terms and conditions) for the £400 and an email detailing the other payments we will need to make before moving in.

The ONLY thing written about the deposit is the amount paid, amount left to pay and “This deposit is held against damage and unpaid rent. When you move out, if there is no damage and all rent has been paid, it will be refunded in full.”

All our dealings have been with the landlord’s employee.

For personal reasons, we have decided we no longer want to rent this place. We let them know as soon as possible, which was less than 48 hours after the viewing.

The landlord, whose bank account the deposit was transferred to, is apparently on holiday until next week and his employee is saying we will need to wait until his return for a decision about returning our deposit.

He says it is usually non refundable.

At no point was this said this is a non refundable deposit, not verbally or in writing. I would understand losing a portion of the deposit if the room was vacant and they were losing money because of our decision, but they still have 3 full weeks to find other tenants.

Can they really keep our holding deposit money?

Esh



Comments

Neil Patterson

9:06 AM, 9th August 2016
About 2 years ago

Maybe others can help me here but the quote:

“This deposit is held against damage and unpaid rent. When you move out, if there is no damage and all rent has been paid, it will be refunded in full.”

makes this sound like a normal regulated deposit which would either need to be protected or returned?

steve p

9:36 AM, 9th August 2016
About 2 years ago

It does not seem as clear that is the case to me, from reading the above it appears the deposit was taken to hold the property, when they then moved in rather than returning the deposit it would be used as half of their normal regulated deposit.

As they have not moved in it would still be a holding deposit which the original poster clearly states at the start that is what they thought they were paying the £400 so would not be necessarily be refundable.

Harlequin Garden

10:12 AM, 9th August 2016
About 2 years ago

Why pay a holding deposit to take the property off the market and then expect it to be returned? What would the reaction be if they had paid a holding deposit and the property was let to someone else?

Ian Narbeth

12:00 PM, 9th August 2016
About 2 years ago

I think the deposit should be returned in full. The Landlord needs to have a contract for its retention and it appears there is none. If no lease is entered into, there can be no damage or unpaid rent. Even if the landlord did have a contract for retention of the deposit he may be limited to recovering costs incurred such as fees for referencing.

I do not think the £400 needs to be protected until a tenancy is entered into.

It might be possible to contract to retain the deposit but in circumstances such as here the landlord has suffered no loss as the tenant has withdrawn within 48 hours and the property is still occupied. It would be an unfair contract term in a consumer contract to provide for forfeiture of the entire deposit.

Romain Garcin

14:37 PM, 9th August 2016
About 2 years ago

Agree with Ian.

The way the note on the receipt is worded it might be argued that a contract for the tenancy was entered into.

Ian Narbeth

16:10 PM, 9th August 2016
About 2 years ago

Thanks Romain. We'd need to see the documents but I very much doubt a receipt will be construed as a contract for a tenancy.
There are some interesting ombudsman cases on holding deposits here: https://www.tpos.co.uk/news-media-and-press-releases/all-news/tag/Holding%20Deposit
which show how the ombudsman views them in the context of agents holding them.

Romain Garcin

16:32 PM, 9th August 2016
About 2 years ago

Reply to the comment left by "Ian Narbeth" at "09/08/2016 - 16:10":

Landlords and agents (and tenants) need to be careful, though.

A contract for such tenancy is not required to be in writing and Esh has a written document stating that a tenancy deposit (not holding deposit) was paid and will be refunded at the end of the tenancy. So this opens the door to complications.

Very interesting link to the TPOS.

Mandy Thomson

7:13 AM, 10th August 2016
About 2 years ago

Hi Esh

Just to be clear, does the landlord live in the same building, either in his own separate apartment or sharing living accommodation with the people he rents to?

This is relevant because if the landlord lives in the same building (unless it's a purpose built block of flats and everyone lives in their own self contained flat), that would mean your tenancy couldn't be an assured shorthold tenancy (AST), and therefore the landlord wouldn't be legally required to protect your deposit. As Ian Narbeth has stated, a deposit only requires protection if there is an AST.

Colin McNulty

10:17 AM, 13th August 2016
About 2 years ago

That was a cracking link, thanks Ian.

Puzzler

8:59 AM, 14th August 2016
About 2 years ago

My agent's holding deposits are non-refundable, however this should have been made clear to you

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