Approaching a Letting Agent to Rent

Zelie

Possibly a slightly naive question but when did it become common for a letting agent to charge a 'holding fee'?

I'm currently renting directly from the LL and prior to that rented mostly in Scotland and have never come across the idea of a holding fee before. Actually I've never been credit-checked either - I just supplied proof of my income and employment and went from there! So is this something new or have I just been lucky?

And also, I take it the holding fee is not repaid when the tenancy begins?

tbs624

The basic idea behind the Holding Deposit (HD) is that the LA stops marketing the property and checks with the LL whether the tenant is acceptable: if the LL decides not to go ahead with a tenancy offer then the deposit gets refunded.

However, if the tenant changes their mind the LA will usually try to keep the HD on the grounds that they could have been showing another potential tenant around/actually letting the property in the interim period. (Tenants should always challenge LAs to show what actual loss has been suffered if there has only been a short period of time involved).

The LA may, at the same time, ask the tenant for credit referencing fees, and again, if the tenancy doesn’t go ahead because of a poor result , the LA tries to keep all/some of the HD too. (The Office of Fair Trading has said that when a tenant has supplied accurate information, but this occurs then the LA has no justification for keeping the HD after turning the tenant’s application down: however, it doesn’t stop some of them from trying.)

The practice has no benefit for a potential Tenant & is weighted in favour of the LA/LL - they can withdraw with no loss to themselves, whereas the Tenant may struggle to get the HD back if the withdrawal is on their own part.

A LL may be advertising his property through more than one LA so, although the original LA may stop showing others round in return for the fee, a different firm may in fact still be offering it to other possible tenants and if one of those looks to be a better prospect then the first Tenant to be simply loses their chance tp proceed, although they would get their HD repaid.( Some tenants give their notice in at their previous property,mistakenly thinking that the HD against the new one means that the LA has to proceed)

Most HD receipts don’t cover key points - a firm date for the start of the tenancy is not agreed in most cases so, again, if a tenant gets cheesed off waiting for a decision and wants to go elsewhere they may not be able to get the HD back.

The full terms of the Tenancy Agreement have not yet been seen at this stage and a Tenant may feel they have no option but to sign up to clauses that they wouldn’t ordinarily have agreed to simply because they don’t want to risk losing their HD.

Where a Tenancy does go ahead, the HD would normally be transferred to be used as part of the Tenancy Deposit/Bond.

Most LLs who self-manage don’t use HDs - its mainly the domain of the LA, with their ever increasing methods of making money from potential Tenants, whilst also taking a fair old percentage from the LL.

Zelie

Wow! Very informative, thanks tbs624.