can landlord keep deposit because you couldn't get a guarantor?

BitterAndTwisted

Yep, it sounds like a holding-deposit: say £150, two credit references at £50 each and a month's rent as deposit. The month's rent as damage-deposit is returnable

mynameisclare

While the letting agents are in their rights to keep the admin fees part, I would say the person is still morally obliged to pay the money back to your friend.

missm29

thanks everyone for the replies, i thought it was alot of money for the landlord to keep if they did even keep it - a small admin fee yes acceptable. And yes the person should still pay back my relative regardless if the landlord had kept the money. They are sulking because my relative wouldnt agree to be guarantor, but she had already lent them the deposit. I shall inform my relative of what you have said.

BitterAndTwisted

There must be a letting agent involved in this: I don't think that many private landlords have the facility to take card-payments over the phone.

The ungrateful sulker needs to get this sorted and find a way of paying back the out-of-pocket relative.

tbs624

BitterAndTwisted wrote: »

Yep, it sounds like a holding-deposit: say £150, two credit references at £50 each and a month's rent as deposit. The month's rent as damage-deposit is returnable

If it's rent, then it's not a deposit

BitterAndTwisted wrote: »

If it was a holding deposit to secure the property and for the landlord to cease advertising until the person had had their credit-checks carried out then these are rarely returned.

LAs/LLs canot simply hold onto a potential Ts money without justification.

oft356
OFT Guidance -

Source oft356

3.41 A 'no refund' term where the tenant is required to make a substantial prepayment before a tenancy agreement is signed, is likely to be unfair. It is common for letting agents to seek a deposit from the prospective tenant once a property has been selected, but terms that preclude refunds of this type of deposit, under any circumstances, may be considered unfair.


3.42 Terms governing the tenant's right to recover prepayments can be made fair by limiting them to the ordinary legal position. Where cancellation is the fault of the tenant, the landlord or agent is entitled to hold back from any refund of prepayments a reasonable sum to cover either the net costs or the net loss of profit resulting directly from the default,22 but not both where this would lead to double counting. Tenants would be at fault if, for instance, they gave false or misleading information, but not merely because the landlord thought their references were not sufficiently good (see paragraph 3.68). The landlord or agent is not entitled to keep any money that could reasonably be saved by finding another tenant, for example.


3.43 An alternative is to set a pre-contract deposit that reflects only the ordinary reasonable expenses necessarily incurred by the landlord. Such a genuine 'deposit' can legitimately be kept in full, since it would be a reservation fee rather than an advance payment. However, such a deposit will normally be no more than a token amount. Otherwise it is liable to be seen as a disguised penalty, even if it is expressed as a payment for a service (see paragraph 3.58).


3.67 Under a pre-tenancy agreement the tenant pays a deposit to the landlord or agent to secure a property before signing the actual tenancy agreement. We object to cancellation clauses if they allow the landlord or agent to cancel without acknowledging any right of tenants to a refund of prepayments,


3.68 A landlord may refuse to offer a tenancy if the tenant's references are unsatisfactory or the tenant fails the verifying or screening process used by the landlord or the agent. However, because landlords or agents have the right to decide what is unsatisfactory or the criteria for failing the screening process, there is scope for them to enjoy unlimited discretion to refuse the tenancy, and so to unfairly retain the deposit. This is unacceptable in our view. Where the landlord cancels a pre-tenancy agreement in response to the tenant's serious breach of contract, he may be entitled to retain some or all of the tenant's prepayment as compensation for any loss directly caused by the breach. We may regard a term as unfair if it makes a substantial prepayment non-refundable in all such cases, regardless of whether the landlord has suffered any loss of this kind

OP - you need to find out what information was given to th e potential T before this money was paid, and what written Ts and Cs were shown to them before they handed over the "deposit". If a T is turned down by the LL/LA, having given full and correct information about themselves , then a LL/LA cannot unilaterally decide to hang on to all of a deposit paid across.

Try the local Trading Standards Officer at the Council if no joy from the LA: the local Tenancy Relations Officer (on the Council's private sector housing team) may also like to be aware of LAs on their patch who retain holding deposits.

boliston

Letting agents normally take a holding deposit to secure a property and this will often include a non returnable admin fee. HOWEVER they can only legally withhold monies if the prospective tenant pulls out, they can't simply help themselves to the tenant's monies if the tenant does not pass a credit check!

BitterAndTwisted

tbs624 wrote: »

If it's rent, then it's not a deposit

I meant that if the damage-deposit was the equivalent of a month's rent. Still, if the tenancy was denied then no rent would have been payable in any case and is therefore fully returnable.

It's entirely possible that since the card-payment was made over the phone, whichever organisation received it, they most probably do not have the card-holder's full details on file to return it by the same method. The relative needs to get hold of the recipient of the payment and discuss with them how and by what method the monies should be returned. Here's hoping that the sulker hasn't had it paid back in cash and is now being untruthful about it. :eek:

boliston

BitterAndTwisted wrote: »

I meant that if the damage-deposit was the equivalent of a month's rent. Still, if the tenancy was denied then no rent would have been payable in any case and is therefore fully returnable.

It's entirely possible that since the card-payment was made over the phone, whichever organisation received it, they most probably do not have the card-holder's full details on file to return it by the same method. The relative needs to get hold of the recipient of the payment and discuss with them how and by what method the monies should be returned. Here's hoping that the sulker hasn't had it paid back in cash and is now being untruthful about it. :eek:

It's normally part of the agreement that if you accept payment by card then any refund has to be made to the same card.

BitterAndTwisted

True, but I believe that in order for them to make a partial refund they would need the card-holder's details because as far as I know the machine doesn't retain the whole card-number and expiry-date or print them on the receipt when the payment was taken. Therefore the relative needs to speak to whoever took the payment and the person applying for the property to try and sort it out.

boliston

BitterAndTwisted wrote: »

True, but I believe that in order for them to make a partial refund they would need the card-holder's details because as far as I know the machine doesn't retain the whole card-number and expiry-date or print them on the receipt when the payment was taken. Therefore the relative needs to speak to whoever took the payment and the person applying for the property to try and sort it out.

Most card machines I've used print a "customer copy" which only shows the last 4 digits of the card, as well as a "merchant copy" which has the full card number and expiry date - presumably to allow the merchant to make a refund if necessary.