Letting: Holding Deposit non-refundable?

morse

Hi All,

Sorry if this is the wrong place to post this but it seems the most relevant.

Recently my partner was looking at moving into rented accomodation nearer to her place of work. She found a suitable apartment that was being let through a high street letting agency. She instructed the agent that she would like to rent this flat and was told that a holding deposit was needed to take it off the market while the formalities were dealt with. At no point was she shown a contract or signed anything. As she was short of funds I paid this deposit for her on my credit card (£300 +2%cc charge) The agent sent her a client information form to complete which she did. This form asked whether she had any known credit issues and she disclosed that she did have a CCJ for student loans.

A couple of weeks later the agent informed my parter that they would not be letting the flat to her due to her poor financial history. They refused to refund the holding deposit as it was non-refundable.

We have asked them again to refund this money but they continue to refuse. I contacted my credit card company and registered a dispute on this payment. They have just got back to me and said that there is nothing they can do as I am bound by the agents T&C's.

Could anyone advise me on how to proceed in getting this money back. Google has come up with a couple of interesing point insomuch as the OFT thinks that this kind of activity (where the agent withdraws) is unlawful but I can't find any firm info on this?

Many thanks for your time, Adam.

Lavendyr

I'm afraid this is typical with most agencies - the so-called "reservation" fee is a payment for them to take the property off the market and carry out reference checks.

However, £300 is an excessive charge in my view (depending on your area I guess) - we paid £90 reservation fee for our last two rentals. Still, if you asked them to go ahead and reserve the property they should have shown you their T&Cs where this will have been stated.

Have you asked the letting agency if they would consider taking her if she could provide a guarantor?

morse

Many thanks for your reply. I can't believe that they are allowed to get away with this.

The agent was not interested in a guarantor and we suspect that they had already let the flat out to someone else.

Since I first posted I have contacted Trading Standards/Consumer Direct and they said that the agent is in breach of contract but it may be hard to prove. I have also spoken with the Association of Residential Letting Agents who said that the agent is entitled to cover their costs but should refund the rest. I actually dispute this as it was them who withdrew and my partner made full disclosure of the facts.

I have been advised to write them another letter demanding the money back and if I don't get any joy, get back onto ARLA.

I am prepared to take this to the Small Claims Court as I think it is really out of order but trying to find any official advise (OFT, TS etc) is proving difficult.

Thanks again.

guppy

Sounds like the CC company are trying to fob you off.

What T&Cs are they talking about if there was no contract signed or explained to you? Did the agency refer to a "deposit" or a "reservation fee". If they described it as the latter, you may be out of luck

morse

guppy wrote: »

Sounds like the CC company are trying to fob you off.

I agree and was surprised by their response. Apparently the CC company contacted the agent and was told that that was their T&C's. I explained the situation again to them but they were quite happy to wash their hand of it. I thought they were jointly responsible?

guppy wrote: »

What T&Cs are they talking about if there was no contract signed or explained to you? Did the agency refer to a "deposit" or a "reservation fee". If they described it as the latter, you may be out of luck

It was described as a goodwill holding deposit to take it off the market and my partner was told that it was refundable if things didn't work out. I can't let them get away with this as £300 is a lot to lose for nothing.

Thanks!

coal9011

If it was me, before going to the Small Claims Court, I would visit the letting agents office - on a Friday afternoon or Saturday morning and demand your deposit back by being as "verbal" as you can, for as long as you can without doing anything illegal (like assaulting them) they may cave-in and return all or some of your deposit if you pester them this way (IF NOT, THEN AT LEAST YOUR FEEL BETTER)

The worst thing that can happen is that they call the police who may ask you to leave the office (after you tell the police why you are there) its worth a try before you start court proceedings!

In any event. DON'T LET THEM GET AWAY WITH IT!!!!!!!!!!!!!!!!!!!!!!!! :mad:

Lavendyr

guppy wrote: »

Sounds like the CC company are trying to fob you off.

What T&Cs are they talking about if there was no contract signed or explained to you? Did the agency refer to a "deposit" or a "reservation fee". If they described it as the latter, you may be out of luck

When you first tell the agency that you want to reserve the property, you should be shown a copy of their own terms & conditions and asked to sign to say that you agree with them. These T&Cs should refer to the reservation fee and the reference check. At this point you'd probably also fill out the information for the reference check. That's when you should pay the reservation fee - i.e. after you have checked over their T&Cs and decided that you agree to them.

The CC is unlikely to refund you the charges if the letting agency demonstrates that they made these T&Cs available for you to view or informed you about them.

Most letting agencies only refund reservation fees if the landlord withdraws the property, not if you fail the reference check.

I really am shocked by the £300 cost though, it is unbelievably high, and I would think that if you go in and kick up a fuss in front of other potential clients you may be able to get them to refund at least some of it.

pcwilkins

The big question is, did the agent tell you when you paid the £300 that it would be refunded if she failed the credit checks?

I suspect they probably didn't, in which case you are probably stuck.

The fact is that the agent's t+c's probably clearly state that the holding deposit is non-refundable. You presumably had a change to read these t+c's and you chose to pay the deposit knowing that it would not be refunded if your friend failed the checks.

I agree that £300 is extortionate, but at the end of the day businesses are allowed to set their own prices. It's up to the customer whether they want to pay that price. The moral of the story, as usual, is "read the small print"!

Peter

morse

Thanks for the replies, it's all very interesting.

Just to confirm, no paperwork/T&C's were shown or mentioned and she was told that the deposit was refundable. I agreed to pay this deposit (over the phone) on this basis.

Google found this :

If an offer is not accepted because the credit referencing checks fail or the prospective tenant is unable to provide financial guarantors, then most letting agents would consider that they are entitled to keep either some or all of the holding deposit. Fortunately the Contract Regulation Unit of the Office of Fair Trading is fairly clear on this point:

“Where the tenancy does not go ahead because the landlord or agent decides not to proceed, whether this is on the basis of a failed reference check or not, then we take the view that they are not entitled to charge the tenant for the costs they have incurred because it is the landlord/agent who has breached the agreement, not the tenant. If a tenant puts down a holding deposit, provides accurate information about themselves and does not withdraw from the agreement, we see no justification for the landlord/agent seeking to keep any of the tenant's monies on the basis that the landlord/agent decides not to proceed with the tenancy.”

In our experience, letting agents simply do not understand or accept this.

but I have been unable to find the original source of this information...

pcwilkins

If you were not told that the deposit was nonrefundable then you have a strong case for a small claims application. The word "deposit" usually indicates that it is refundable, otherwise it should have been called a "charge" or something.

Visiting the office of the agent and kicking up a fuss (nothing illegal, mind) might be worth a try.

Peter

coal9011

Yes............ take pcwilkins with you - in "uniform" of course!!!!!!!!