Landlord wants £1,000 retainer

Twinkle_Star_5

I am currently in the process of renting a house. I am doing so directly with the landlord, and have just submitted my reference details.

The process has taken a little while, through no fault of mine own, and I finally received the reference request on Monday. I tried to fill it in but it required landlord details which he provided on Monday night. I then couldn't complete it yesterday, but have done so this morning.

I received an email from the landlord which says:

I realise we already have a verbal agreement but to demonstrate your commitment and while we await completion of the reference check process, would you mind terribly paying a non refundable retainer of GBP1000 into my bank account before close of business Thursday 16th Dec?

Once you have signed the tenancy agreement, the retainer will become part of your initial payment and will be reflected in the invoice.

Please confirm you are OK with this and I'll send you my bank account details.

I am completely committed to taking the property, but I think that £1,000 is very steep for a holding deposit (most letting agents I have spoken with typically say £200-£300).

I'm also not sure what he means by non-refundable, obviously I would lose it if I pulled out (no risk there), but I am not sure what he expects if the reference check is not to his liking (no reason it shouldn't) or if he decides to go with somebody else.

I guess that I need to ask him for clarification on these points, but I just wondered whether anybody had any thoughts or advice.

BTW I have checked the land registry, and the owner's name does match his (although I have seen no ID). I have also been to the property with him, and the neighbour also obviously knows him, so I think there is little reason to doubt that he owns the place. He does, however, live abroad (although I think he would want the money paying into a UK bank account).

I though that I might suggest paying him £200 instead.

GillsMan7

Personally, I'd be wary. A LL who wants a retainer should have disclosed this at the beginning of the process. This would set alarm bells ringing for me.

jennikitten

Sounds very steep to me too. If it only forms 'part of the initial payment', then how much are you supposed to give in total as the initial payment (just in case you're renting a property that's ridiculously expensive and £1k isn't actually that much)?

<sebb>

£1000 is far too high, and in anycase I'd want something a bit more substantial that "its non refundable". What happens if the LL pulls out or the property becomes unfit for habitation (eg a fire)? Is it still non refundable?

In those cases you'd probably get your money back through the small claims court, but with your LL being abroad, this could be a bit trickier.

Personally, I wouldn't pay it.

Oh and if you have an overseas landlord and there is no intermediate agent taking the rent then you need to check whether you have to comply with the NRLS http://www.hmrc.gov.uk/cnr/nr_landlords.htm

The LL can apply for an exemption, but don't take his word for it. You need to hear it from the HMRC.

It's quite an onurous duty for the tenant, but if you don't comply when you were meant to you could end up paying your landlord's tax for him plus fines.

DVardysShadow

I would be wary too. It sounds like a scam, but more likely, the guy probably has cash flow problems. It is more money than I would put up front before a contract. Non refundable is unacceptable too for this amount of money.

Twinkle_Star_5

jennikitten wrote: »

Sounds very steep to me too. If it only forms 'part of the initial payment', then how much are you supposed to give in total as the initial payment (just in case you're renting a property that's ridiculously expensive and £1k isn't actually that much)?

Well, the rent is £1,900 a month and I think that the inventory deposit will be a month's rent, so I assume that the initial payment will be £3,800.

So £1,000 is not a massive percentage of that but, of course, it is still a lot of money to give to somebody without much security.

Guilbert

That seems really dodgy. As it's non-refundable the LL could simply tell you something came up in your references (or any other reason) so he's not going to let you the property but he's going to keep the £1,000.

This sounds just like those scams on gumtree when a supposed LL offers an amazing property for an amazing price. Once these retainers are paid all communication dries up.

anselld

You shouldn't pay unless he gives you a written Terms and Conditions for the holding deposit. Deposit should only be non-refundable if you change your mind. It should be refunded if the LL pulls out or is unable to complete for any reason.

maninthestreet

'Commitment' is a 2-way street - what 'commitment' is the LL offering in return for your commitment of £1,000 of your money???

G_M

If he's already abroad - don't pay.
Pay direct to him in person (and get a receipt AND clear, acceptable, T&Cs of circumstances under which it IS refundable)
Or pay to his authorised UK agent. (plus as above)
And anyway £100-200 is quite enough to show you are serious pending contract

As he's abroad, also check:
a) he will give you a valid UK address (NOT the property) for serving official notices on him / advising him of repairs etc (it's fine to use email for speed/convenience, but it MUST be followed up in writing, to a UK address - this is a legal rqmt)
b) his tax position. As said above, YOU can be held liable for HIS rental tax unless you pay rent to a UK based agent.

Twinkle_Star_5

Firstly, thanks to all for the advice on the retainer.

It turns out that once I had spoken with the LL, he was happy to drop the retainer, especially as the tenancy reference was due to come back the next day (actually took a couple of days longer).

Anyway, the situation now is that we are planning to go ahead with the tenancy, but I would appreciate some advice on the timing and logistics of the deposit, first month's rent and signing the AST.

The LL (who is in Canada) wants to follow this process:

1) Me to pay the deposit (£1,900) and the first month's rent (£1,900) into his bank account
2) The LL to then sign a copy of the contract, send me a scanned copy, and post me the originals
3) Me to print out and signed the scanned copy, scan and send it back to him (and then sign and return the original whenever it arrives)
4) Me to pick up the keys from his neighbour on Jan 4th (which is move in day)

Personally I think that we should sign the contracts first, because we are then legally committed (me to pay the deposit and rent, and him to let the house to me). If I pay him before I have nothing in writing that I can rent the house.

Does that sound right?

I do have relatives in the same city as him (Toronto), one of whom is a lawyer in a well established firm. I wonder if that fact could be used to help with the process.

The LL seems very reasonable to me, but of course wants to cover himself.

Any advice on the best approach would be appreciated.

EDIT: Oh, one more thing. The LL also has a family member in London, who I expect could also get involved, it it would help.