Court threat by Tenant wanting deposit back...

tabitha100

Im new to this Landlord business, here is my dilema...
Prospective tenants viewed our house, (we were living there, mortgaged) they were very keen and the week after a Holding deposit was paid to us. Move in date was agreed for 1st Dec. and verbal agreement they wanted to buy our washing machine.
Told them we are now moving out for them and will do our very best to have it all brand new for the 1st. They were very excited. We moved the family out ( a huge task to do in a short space of time) ...Painted everywhere, professionally cleaned to a hight standard. 5 days before move in date the tenant said they didnt want to purchase the washing machine.
Had to hire Man and Van to move washer as we had already sent van back from our move.
Turned down 2 prospective tenants during this time who saw advert before it expired and wanted to view.
Called Tenant on the Fri and agreed on Mon 1st to meet at the house and hand over keys, take 1st months rent, go through itinerary and sign tenancy agreement.

• Went to the house (1hour drive) sat and waited half an hour. Called tenant twice, no reply and then she called back and said they weren’t taking the house.

...I know... stupid arent we!? Now she wants her deposit back (equivalent to 1 months rent). Didnt know this game was so ruthless. Is the law on my side?

Lavendyr

Just so I understand - the holding deposit, was this effectively their deposit which you would hold until the end of the tenancy and then give back, or was it a deposit purely for you to hold the house for them until they moved in? What was the paperwork surrounding this deposit?

Heyman_2

That sounds awful and you have my sympathies.

I'm not too sure of where the law stands on this but by the sounds of things you were going to do all the paperwork on the 1st, so you probably haven't got anything written down.

Edit:
Ok edited this as I was talking without knowledge! There is a difference (as Lavendyr is indicating above) between HOLDING deposits and SECURITY deposits.

You are possibly entitled to keep the deposit as long as it was definitely agreed to be a holding deposit.

Colincbayley

For what reason was the deposit collected?

A) For breach of terms of the tenancy or damage to the property once the tenant had taken up the tenancy?

or


To take the property off of the rental market and secure it for the tenants?

If A, then you will have to return the deposit, if B, then you are well within your rights to retain the holding deposit.

Margaret54

Sorry to hear of your problems. A real headache for you. I can't offer any advice sorry, but there are great people here who can help.

tbs624

Tabitha - what paperwork, if any,was there relating to this "holding deposit"?

If it is a genuine holding deposit and the tenant withdrew, due to no fault of yours, then you can only retain an amount to cover costs reasonably incurred by you because of their failure to proceed, and you would need to outline what those costs are. You say that there were 2 other "potential" tenants who wanted to view but there is nothing to say that either of these would definitely have either turned up to a viewing or indeed actually taken up the let, had the defaulting one not said that s/he wanted the property.

Have you tried since the 1st December to re-let the property? If you haven't, then IMO it would be unfair to retain the whole deposit which you say was equivalent to a month's rent. It would be fair to withhold an amount equivalent to re-advertsing costs etc.

My view is that holding deposits are best avoided. For future tenancies, your best bet would be to make sure you have eveything in writing asap (including agreements about white goods) so you should maybe look at joining one of the National LL Associations ( or a local affiliated branch) - the membership fees can be set against rental income for tax purposes and most LLs find their support & resources invaluable. Hope you had your EPC done, and had your mortagor's consent to let etc all sorted.Good luck with getting new tenants

Debt_Free_Chick

tabitha100 wrote: »

Im new to this Landlord business, here is my dilema...
Prospective tenants viewed our house, (we were living there, mortgaged) they were very keen and the week after a Holding deposit was paid to us.

What do you mean by a "holding deposit"? Was this placed with a Deposit Protection Scheme?

Had you signed an agreement/contract at this time?

Called Tenant on the Fri and agreed on Mon 1st to meet at the house and hand over keys, take 1st months rent, go through itinerary and sign tenancy agreement.

• Went to the house (1hour drive) sat and waited half an hour. Called tenant twice, no reply and then she called back and said they weren’t taking the house.

...I know... stupid arent we!? Now she wants her deposit back (equivalent to 1 months rent). Didnt know this game was so ruthless. Is the law on my side?

So when was the agreement signed?

olly300

Debt_Free_Chick wrote: »

What do you mean by a "holding deposit"? Was this placed with a Deposit Protection Scheme?

Had you signed an agreement/contract at this time?



So when was the agreement signed?

In England and Wales tenancy agreements don't have to be written - they can be verbal or implied by the actions of both parties.

However as the tenant didn't pay the first month's rent there was no tenancy agreement in force.

The OP needs to work out what sort of deposit they were given.

From my point of view having given landlords' holding deposits in the past it doesn't sound like a holding deposit as:
1. Holding deposits are less than the actual security deposit on the property.
2. The landlord gives a receipt stating that it is a holding deposit.