Misled over application to rent

dohadeer

A friend and I are looking for a flat to rent. We viewed a property last week that we liked, so I phoned up to put down a 'holding fee' on the property. The person on the phone took a debit card payment of £200 from me and I explained that we would hand in the relevant forms sometime the following week.

I've gone in today to hand in the forms and they have claimed this £200 was just an 'application fee,' which they take from multiple applicants and then choose their favoured application and return the £200 to the other unsuccessful applicants.

I cannot believe this and have never heard of such a system before. I received an information form when I viewed the flat and it states about the £200 application fee which will be returned if our application is unsuccessful, but I assumed that this meant for things like bad credit etc and nowhere does it explain that there could be multiple applicants. Also, when I phoned up asking to put down a £200 'holding fee,' at no point was it made clear to me that my £200 payment was not in fact a holding fee.

Is this a fair system for a company to use, ie to take this large fee from several applicants and then pick between them on any criteria of their choosing and return the fee to the unsuccessful applicants? It seems a lot of money to expect people to be out of and also it means that people cannot commit to any other properties whilst waiting to hear back from this application.

Also, if this is a fair system that they have chosen to use, why was this system not explained to me clearly at any point during my application? Surely this should have been explained either in writing, or over the phone, before I paid £200 to this company. Infact, the company should not even have accepted my £200 without the forms accompanying it, as this is in their words an 'application fee.' The only reason I would pay £200 without the forms is clearly as a 'holding fee' to secure the property, so they must be aware of what I thought I was paying and did nothing to explain otherwise.

Thanks for your help.

ladyrider260

It's a form of deposit and some L.A do have this system. It's probably due to people in the past applying for a property, they are offered the property, they take ages to submit forms and application fees, then they find somewhere better and leave the L.A in the lurch. I agree it's not the most convenient way of doing it and it should have been explained but it weeds out the timewasters and speeds the application up, once the chosen tenant is accepted they can get on with references etc.

dohadeer

Surely that is exactly what a holding fee is used for, to 'weed out the timewasters' as you put it?

Letting agents take a holding fee from someone which shows that person is genuinely interested. It doesn't cost the potential tenants anything as it then comes off their deposit, however if the tenants change their mind and pull out, they lose this holding fee which the letting agents then use to cover the costs of re-advertising the property etc.

I don't understand how this system of taking fees off several applicants can possibly work, from an applicants point of view. That would mean applicants can only submit one application at a time, (incase they ended up being successful on more than one property) and then have to sit around for up to 5 days, waiting to see if each application is successful, at no point guaranteeing a flat. You could be a perfectly good, reliable, applicant, but lose out each time because you aren't the preferred applicant.

It all seems very bizarre to me. If every company chose to let property in this way, the whole system would collapse.

ladyrider260

Holding fee, application fee, it's all the same thing. It holds you as a potential tenant and is usually used to take up references etc if you're accepted. They do it with all applicants so they have a choice. Yes, it DOES reserve you as a potential tenant and it limits you, that's part and parcel of renting. It's not supposed to work in the applicants favour!

It's how most agents work these days and being as rentals are in demand, its not the agents who are the beggars but the choosers. As much as the system is one-sided, that's how it works. Perhaps when you apply for a property with another agent, ask them to clarify their application procedure and fees.

dohadeer

I think you're failing to understand my point.

A 'Holding Fee' or whatever you want to call it can only be taken from one potential tenant at a time and as it suggests, 'holds' the property for that person, ie it is theirs until a certain time expires, or they choose to withdraw their application, or their application is deemed unsuccessful. The property is effectively taken off the market and the applicant who has paid the holding fee has first refusal.

Every company I have ever rented with in the past has used this system. That is now 6 different letting agents. As far as I am aware, this is the tried-and-tested, recognised system that the vast majority of companies use, because it works reasonably well both ways and allows the letting market to operate as smoothly as possible.

The system I have just encountered today, of taking an 'application fee' from a number of potential applicants and deciding between them on whatever major or minor criteria the letting agent/landlord decides, is not a system that could possibly work if several companies started to do this. I can explain why if you want but I'd hope it's fairly clear. It would result in many people becoming homeless through absolutely no fault of their own.

The person at the letting agents who I stood and argued with for about half an hour was even shameless enough to say to me, 'If you apply for a job, do you expect to be the only person who applies for the job?' My eyes just about popped out of my head before I pointed out to him that I've never been asked to pay £200 to apply for a job before.

bebewoo

What a scam, please name and shame, this is not normal practice.
Ladyrider you are incorrect, a holding fee holds the property for the tenant, meaning the property is taken off the market. It is entirely in the interest of the tenant.
An "application fee" is a load of nonsense and I would not be surprised if they are not a real letting agency.

dohadeer

bebewoo wrote: »

What a scam, please name and shame, this is not normal practice.
Ladyrider you are incorrect, a holding fee holds the property for the tenant, meaning the property is taken off the market. It is entirely in the interest of the tenant.
An "application fee" is a load of nonsense and I would not be surprised if they are not a real letting agency.

Thanks bebewoo, I was beginning to think I was going mad there.

I wouldn't have chosen personally to name and shame them, (especially as they still have my £200) but they are called Southside Property Management and are an Edinburgh based company. I was in their offices today and they seemed 'real' enough but it was a very bizarre set-up. As I said previously I have rented with 6 different Edinburgh letting agencies in the past and each of their offices would be small affairs with anywhere between 2 and 5 desks. This office today was a huge office that stretched way back in rows of 2 desks, possibly around 16 desks in total, almost like a school classroom, and there were probably up to 10 staff there when I was in, all watching me whilst I was having a 'debate' with one of the members of staff.

I'm very surprised that I've not heard of a company of this size before, having searched for flats to rent on so many previous occasions. It seems strange how a company with an application process that is so wrong could be successful enough to have this massive office and employ so many staff.

[Deleted User]

Hi dohadeer

The exact same thing happened to me!

I viewed a property and the landlady just happened to work at the letting agents who were advertising it.

I looked at in on the Sunday, she gave me an application form there and then, went through few things and said if I wanted to go ahead and apply for it to get my 'holding deposit/reservation fee' paid asap.

I called the letting agency on the Monday, paid £200 by debit card over the phone explained I would go along the following day with my application form and all the documents I needed, id, bank statements etc.

Went it came to that day, the lady who is renting the property out (works at the letting agency) called me to basically say, we're refunding you your £200 fee as now someone else has paid theirs and got their application form in quicker!

I had paid my fee about 4pm on the Monday and they called me early Tuesday morning saying that! I also thought the whole point of the HOLDING / RESERVATION fee was to HOLD / RESERVE the property for me whilst I went through with my application.

Looks like they just thought, ah sod it we'll take that fee from everyone and just refund the ones who havn't brought their app form in quick enough!

I've since found another house, which is cheaper, I prefer and the landlord is lovely! So it was a blessing in disguise.

Annoying though isn't it! :mad:

picklepick

Ah you're in Scotland!

In Scotland it is illegal for a letting agency to charge you anything other than a deposit.
This sounds very fishy to me. If I were you I'd call Shelter Scotland for advice.
http://scotland.shelter.org.uk/get_advice/how_we_can_help/_free_housing_advice_helpline

ashleypride

Its a scam, one company was on Watchdog a couple of months ago.
https://forums.moneysavingexpert.com/discussion/3903405

dohadeer

Thanks for your help, I'll give Shelter a call in the morning.

I'm not sure it's a scam as such, rather just a really dodgy way of running their business/conducting their applications process.

It's a bit annoying, because:

1. It was a really nice flat, but there's no way I'd consider renting it from this company.

2. It doesn't leave me very long to find alternative accommodation.

3. There's nothing I can really achieve by pursuing this further, (assuming I get my £200 back with relatively minimum hassle), however I still want to take this up with Shelter, Edinburgh Council and whoever else is relevant, to ensure that nobody else falls victim to this in the future.
I am assuming that I wouldn't have much of a case for any sort of compensation from this company on top of my £200, for the time they've wasted and extra stress they've caused me at having to now find somewhere else at short notice?