Holding deposit

olemcdonald

Please excuse me if this is a silly question. In the near future we are going to be renting for a short time. It is my understanding that the process is this, please correct me if I am wrong.

1. We find a property we like that say is available in 1 month.
2. We pay a holding deposit.
3. We have/pay for credit checks/references taken.
4. Pay deposit and 1st months rent.
5. Date arrives, we move in...

but...what happens to the holding deposit, is it applied to the rent. What happens if you pay a holding deposit and fail the credit checks. Do you pay a holding deposit if the existing tenant hasn't left yet?

Any tips would be appreciated.

Catblue

We're in a similar position and it does appear that things are more complicated than they need to be.

This is the way our letting agency works:

We paid £200 for the holding deposit and a further £75 each for credit checks/references. The holding deposit takes the property off the market for up to a month while the checks are being carried out. It means that the letting agency cannot show anyone else around the property during this time. The letting agency cannot take a holding deposit from anyone else for the property during this time.

If the credit checks/references are not good (or if you change your mind about renting the property), then you lose the £200.

If the credit checks/references are successful, the holding deposit will then be retained and will form part of the house deposit. We need to pay a total of £550 for the main deposit on the house, so we'll only pay them a further £350, just before we move in.

The full £550 will be returned to us when we end the tenancy (if everything is up to scratch, of course).

I would imagine that letting agencies would take a holding deposit from prospective tenants, irrespective of whether the house has an existing tenant or not.

I'm guessing that different landlords/agencies may have different ways of treating holding deposits, so make sure that you ask up front and get the details in writing.

Hope you find a place soon.

Gold_Shogun

The holding deposit :-

A) ... Should be RETURNED to you in full IF the LL/LA rejects you for any reason ;
or
... Should be applied to the "Tenant's Deposit" or 1st months rent IF the tenancy proceeds ;
or
C) ... MAY sometimes be RETAINED (forfeited by you) IF YOU do not proceed (pull out) after the LL/LA has approved you ... This is DEPENDANT on the precise wording of the "Holding Deposit Agreement" between yourself & the LL/LA.

BTW ... Welcome to the forum, and I hope this helps you.

Cheers
Bob

Meatballs

Catblue wrote: »

If the credit checks/references are not good (or if you change your mind about renting the property), then you lose the £200.

There is no definition of what a 'not good' credit check or reference is.

Therefore agents would be free to hold the deposit and say 'You once missed a payment with your mobile phone company 5 years ago therefore we are going to keep hold of your £200.'

Fair? :rolleyes:

I think mine just get round it by not charging a holding deposit but by charging a £150 credit check. You dont want to walk away from £150 (so it acts as a deposit) but it isn't returnable...

lynzpower

Gold_Shogun wrote: »

The holding deposit :-

A) ... Should be RETURNED to you in full IF the LL/LA rejects you for any reason ;
or
... Should be applied to the "Tenant's Deposit" or 1st months rent IF the tenancy proceeds ;
or
C) ... MAY sometimes be RETAINED (forfeited by you) IF YOU do not proceed (pull out) after the LL/LA has approved you ... This is DEPENDANT on the precise wording of the "Holding Deposit Agreement" between yourself & the LL/LA.

BTW ... Welcome to the forum, and I hope this helps you.

Cheers
Bob

Cheers for this bob, is this laid down in law anywhere or is it just "common sense/ recieved wisdom?" I have to get my HD back from my LA and sense she might be obstructive.

Meatballs

Page 21:

http://www.oft.gov.uk/shared_oft/reports/unfair_contract_terms/oft356.pdf

and 27, oh and definitly 28!

Catblue

Catblue wrote: »

If the credit checks/references are not good (or if you change your mind about renting the property), then you lose the £200.

Sorry people, this was my misunderstanding. I've just phoned the letting agency and they told me that they would always return the holding deposit if the credit checks/references are not good.

They also told me that our checks/references are fine and we can move in at the beginning of next month.

Result. :T

Gold_Shogun

lynzpower wrote: »

Cheers for this bob, is this laid down in law anywhere or is it just "common sense/ recieved wisdom?" I have to get my HD back from my LA and sense she might be obstructive.

Hi Lynz,
A) = Not Statutory, but standard Legal Principle established from prior cases where Vendor unilaterally chooses not to proceed.

= Statutory requirement under both Contract & Housing law relating to such deposits.

C) = Non Statutory ... Standard Contract principles dependant upon Individual Contract Terms.

Cheers
Bob