Letting agents' holding fee

Elston

Apologies if this is covered elsewhere - all the related posts seem to be a few years old and I know legislation has changed in past few years. 

My son and his wife are completing an application to view a rental property. The agreement states that 1 week's rent must be paid prior to viewing. They've been told that if their application is rejected this will be refunded but if accepted, and they decide to go ahead,  it will be credited to their rent account, so presumably reducing their first month's rent. What they're saying though is that if my son and wife decide after viewing that the property is unsuitable, and do not proceed, the holding fee will not be refunded. I just wanted to know if this is legal in light of the Tenants Fees Act. 

Any guidance would be much appreciated. 

Thanks, E

_Penny_Dreadful

It is unusual to pay a holding fee before viewing a property.  Usually you view a property and if you like it will be asked to pay a holding fee when you submit your application because at that point you are serious about renting it, something you cannot know until you've seen this place.  In their position I would walk away from this property and keep looking if I were not allowed to view it without paying the holding fee.

A landlord is only allowed to take one holding deposit for a property at a time so if there are multiple people booking viewings and this is the letting agent's modus operandi then they are very naughty.

user1977

For a start, are they certain they're dealing with a (relatively) legit agency or landlord? Trying to get cash before a viewing is a common scam (as the scammers don't even have a property to be viewed...).

propertyrental

Without naming them, is this a High Street agency?

The Tenant Fees Act allows only one holding fee to be taken - the idea is that the property is 'held' for the applicant so obviously it can't be held for multiple applicants.

Is the agency turning away other applicants who want to view, or taking holding fees from others and letting multiple people view?

LegallyLandlord

I agree with the others. Completely dodgy. 

Here’s some good advice: 

https://england.shelter.org.uk/housing_advice/private_renting/complaints_about_letting_agents

Elston

Thanks to everyone for advice. 
They decided not to proceed with that agent but amazingly, only today, they have found another property, through a different agent, and here is what it says on their website:

"Reserving the property

Once you have decided on a property, you will need to reserve it by paying a ‘reservation fee’, usually one month’s rent. If the landlord declines to grant the tenancy due to unsatisfactory references or if you decide not to proceed for any reason, or if you fail to provide complete and accurate information in your application you agree to forfeit this fee."

How can these agents do this? Surely it is illegal? When they talk about 'references' does this include failing credit search? 

This is a real minefield. 

Elston

propertyrental said:

Without naming them, is this a High Street agency?

The Tenant Fees Act allows only one holding fee to be taken - the idea is that the property is 'held' for the applicant so obviously it can't be held for multiple applicants.

Is the agency turning away other applicants who want to view, or taking holding fees from others and letting multiple people view?

The agency is a local firm with one, possibly two branches. Their reviews are pretty awful. As stated in my earlier post today, they did not proceed with viewing. 

propertyrental

Elston said:

Thanks to everyone for advice. 
They decided not to proceed with that agent but amazingly, only today, they have found another property, through a different agent, and here is what it says on their website:

"Reserving the property

Once you have decided on a property, you will need to reserve it by paying a ‘reservation fee’, usually one month’s rent. If the landlord declines to grant the tenancy due to unsatisfactory references or if you decide not to proceed for any reason, or if you fail to provide complete and accurate information in your application you agree to forfeit this fee."

How can these agents do this? Surely it is illegal? When they talk about 'references' does this include failing credit search? 

Again. Illegal.

Tenant Fees Act:

Guidance here:

A landlord or agent can take a holding deposit from you to reserve a property whilst reference checks and preparation for a tenancy agreement are undertaken. A landlord or agent cannot ask you for more than one week’s rent as a holding deposit (this cap is based on the total agreed rent for the property).

A landlord or agent should stop advertising a property once a holding deposit has been paid. Landlords and agents can only accept one holding deposit for one property at any one time. They are not permitted to take multiple holding deposits for the same property.

Landlords and agents must refund the holding deposit in full within 7 days of:

• you and the landlord entering into a tenancy agreement

• the landlord choosing to withdraw from the proposed agreement; or

• the ‘deadline for agreement’ passing without a tenancy having been entered

A holding deposit can only be retained where you:

• provide false or misleading information which the landlord or agent can reasonably take into account when deciding to let a property – this can include your behaviour in providing the false and misleading information

• fail a right to rent check

• decide not to proceed with a tenancy (i.e. you ‘withdraw’ from a property) – unless a landlord or agent imposes a requirement that breached the ban or acted in such a way towards you or a relevant person that it would be unreasonable to expect you to enter into a tenancy agreement with them fail to take all reasonable steps to enter into a tenancy agreement (and the landlord or agent takes all reasonable steps to do so, for example, clearly requesting information required to progress the tenancy)

A landlord or agent must return the holding deposit where they impose a requirement that breaches the ban or acts in such a way towards you or a relevant person that it would be unreasonable to expect you to enter into a tenancy agreement with them (e.g. a landlord or agent asks you to pay a prohibited payment such as a fee for referencing, seeks to include an unfair term in your tenancy agreement or acts in an aggressive or harassing way).

Elston

Thank you, that's really helpful. This practice seems to be quite common - just how do these firms avoid prosecution? 

YoungBlueEyes

Maybe people don't report them, and move on to view other properties...

Tank40

propertyrental said:

A landlord or agent must return the holding deposit where they impose a requirement that breaches the ban or acts in such a way towards you or a relevant person that it would be unreasonable to expect you to enter into a tenancy agreement with them (e.g. a landlord or agent asks you to pay a prohibited payment such as a fee for referencing, seeks to include an unfair term in your tenancy agreement or acts in an aggressive or harassing way).

Would this include discovering clauses which the tenant deemed unreasonable in a contract which was only given to the tenant after paying the holding deposit? [^ my emboldening ^].