Estate Agent keeping Holding Deposit

Bulseft

Hey

My son applied to rent a property, he failed the reference check and the estate agent is refusing to return the holding deposit (£200).

Response from estate agent:

I’ve spoken to the landlord further in regards to this, due to the nature of these payments being repetitively late we’re afraid your referencing had failed meaning the landlord no longer wishes to proceed further at this time.

To clarify my son did make late payments with his previous landlord, but sadly that was due to his housemate not paying on time. My son did complete all credit / reference checks and did not provide false or misleading information. 

I asked the estate agent the legal reason for keeping the deposit and he quoted a document that was sent prior to paying the holding deposit.

This was his response:

We can indeed retain the holding deposit for a non acceptable reference. Please find attached the document provided to you prior to yourself making payment of the holding deposit, clause 2 and also the fist line of ‘Supply Information’ refer to the reasoning for retaining the funds.

Clause 2:

2) References**
You are required to complete reference forms (one each per tenant) so that we can progress your tenancy. If you have any County Court Judgements against you, it is important you divulge these prior to paying a Holding Deposit. As there is a deadline to sign the tenancy agreement it is very important that these forms are returned to us completed within 48 hours. The tenancy is subject to satisfactory references. Should the reference process not be successful then we won’t be able to proceed further. 

Supply Information:

The Holding Deposit may not be returned if you:

- provide false or misleading information or omit to tell us information which we can reasonably consider when deciding to let a property – this can include a tenant’s behaviour in providing false or misleading information.

- fail a Right to Rent check.

- withdraw from letting a property.

- fail to take all reasonable steps to enter into a tenancy agreement and the landlord or agent takes all reasonable steps to do so.

The estate agent didn't offer a solution, either by guarantor or requesting x months deposit and it appears the landlord no longer wishes to proceed further at this time.

Is it worth me following this up?

Many thanks

saajan_12

Bulseft said:

Hey

My son applied to rent a property, he failed the reference check and the estate agent is refusing to return the holding deposit (£200).

Response from estate agent:

I’ve spoken to the landlord further in regards to this, due to the nature of these payments being repetitively late we’re afraid your referencing had failed meaning the landlord no longer wishes to proceed further at this time.

To clarify my son did make late payments with his previous landlord, but sadly that was due to his housemate not paying on time. - well son could have paid the full rent on time and then collected from the housemate later. 
My son did complete all credit / reference checks and did not provide false or misleading information. - so did he declare the late payments? 

I asked the estate agent the legal reason for keeping the deposit and he quoted a document that was sent prior to paying the holding deposit.

This was his response:

We can indeed retain the holding deposit for a non acceptable reference. Please find attached the document provided to you prior to yourself making payment of the holding deposit, clause 2 and also the fist line of ‘Supply Information’ refer to the reasoning for retaining the funds.

Clause 2:

2) References**
You are required to complete reference forms (one each per tenant) so that we can progress your tenancy. If you have any County Court Judgements against you, it is important you divulge these prior to paying a Holding Deposit. As there is a deadline to sign the tenancy agreement it is very important that these forms are returned to us completed within 48 hours. The tenancy is subject to satisfactory references. Should the reference process not be successful then we won’t be able to proceed further. 

Supply Information:

The Holding Deposit may not be returned if you:

- provide false or misleading information or omit to tell us information which we can reasonably consider when deciding to let a property – this can include a tenant’s behaviour in providing false or misleading information.

- fail a Right to Rent check.

- withdraw from letting a property.

- fail to take all reasonable steps to enter into a tenancy agreement and the landlord or agent takes all reasonable steps to do so.

The estate agent didn't offer a solution, either by guarantor or requesting x months deposit and it appears the landlord no longer wishes to proceed further at this time.- they don't have to offer other solutions, and can set any criteria eg credit checks for the named tenants. (The others may leave the LL in a worse position, as you can't charge extra deposit, rent upfront only helps for a limited period, not if the tenancy lasts years, and guarantor still means more hassle checking the guarantee is valid and chasing them rather than a tenant who has a history of just paying on time). 

Is it worth me following this up? - only so far as to say "keep me updated if other properties come up". 

Many thanks

In line.. sounds like son failed the reference, so deposits wouldn't usually be refundable. What exactly did they say upfront? 

Bulseft

My son did complete all credit / reference checks and did not provide false or misleading information. - so did he declare the late payments? 

He did not, but it's his second rental property and he just answered the questions given. How would he know what the reference was going to return?
Obviously I have told him to state that up front when moving forward with any estate agent. 

Out of curiosity, is this just bogus information? 
https://england.shelter.org.uk/housing_advice/tenancy_deposits/holding_deposits/holding_deposit_not_returned
https://england.shelter.org.uk/housing_advice/tenancy_deposits/holding_deposits/letter_template_holding_deposit_refund

Live and learn.

canaldumidi

Assuming that son and housemate were both joint tenants on the same tenancy they would be 'jointly and severally' liable for the rent. That means they are each responsonsible for the full rent. How they divide that between themselves is not legally relevant. eg if one has a single room and the other a double room they might decide to split the rent 60/40 instead of 50/50.

That is a private matter between them. All the LL/agent cares about is receiving the full rent, and legally they are each equally liable for this.

So yes, your son was in arrears.

Where an applicant fails credit checks, a holding deposit can be retainied. The logic here is that the LL/agent has wasted time (and hence lost rental income) by holding the property for the applicant. It is hardly the LL's fault that the applicant has an undisclosed history of rent arrears.

If the LL does not wish to accept a guarantor, or rent in advance, he does not have to. There are good business reasons for preferring a 'clean' tenant over one with a history of arrears even if supported by a guarantor (or 6 months advance rent).

See also

Tenant Fees Act 2019: guidance for tenants (updated September 2020)

saajan_12

Bulseft said:

My son did complete all credit / reference checks and did not provide false or misleading information. - so did he declare the late payments? 

He did not, but it's his second rental property and he just answered the questions given. How would he know what the reference was going to return? - its not about knowing what would get found out, but declaring his honest rental history. If he read the deposit document, it clearly stated that they expect son to not omit anything relevant. Son's history of rent payments is obviously relevant to son's future rent payments. If he also read his last tenancy agreement, then that would clearly state its joint & several, so if the full rent isn't paid (regardless of which housemate) then son is late. 

Obviously I have told him to state that up front when moving forward with any estate agent. 

Out of curiosity, is this just bogus information? 
https://england.shelter.org.uk/housing_advice/tenancy_deposits/holding_deposits/holding_deposit_not_returned
https://england.shelter.org.uk/housing_advice/tenancy_deposits/holding_deposits/letter_template_holding_deposit_refund

Live and learn.

Not bogus info, but the key is what constitutes 'wrong and misleading information'. 

What questions were there about past rent, arrears, etc? And what did son answer? 

pinkshoes

I'd argue this is rather unfair if he was told what the criteria were and declared anything he needed to. 

I would send a written response with a copy of his bank statements saying that although his housemate was late paying the rent, his rent was paid in full and on time every month which they can see from his bank statements (highlight the payments), therefore the reference from the previous landlord is misleading as it referred to the payment from BOTH tenants.

I would then state that as you have provided evidence showing that the reference was incorrect, they should refund the holding deposit in full or continue with the rental contract as all criteria have been met.

TBagpuss

pinkshoes said:

I'd argue this is rather unfair if he was told what the criteria were and declared anything he needed to. 

I would send a written response with a copy of his bank statements saying that although his housemate was late paying the rent, his rent was paid in full and on time every month which they can see from his bank statements (highlight the payments), therefore the reference from the previous landlord is misleading as it referred to the payment from BOTH tenants.

I would then state that as you have provided evidence showing that the reference was incorrect, they should refund the holding deposit in full or continue with the rental contract as all criteria have been met.

The problem is, the reference wasn't incorrecct. Assuming he had join and several liability, whoch is the tenancywas in the joint names of himself and the other housemates, how they split the rent is irrelevant, forthe reasons Canaldumidi gives. If the previous property was an HMO and each tenannt had their own individual contract with the landlord then you would be correct, the reerence was wrong, but assuming that wasn't the case then the reference wasn't wrong, rent for ehich he was jointly liable was late.