Can agencies charge "validation to rent fee"?

emimagine18

I put an offer in to rent a property with a large, reputable UK agency. My offer was accepted by the landlord. During the offer process, they took my bank details as they said if we fail the referencing/credit check or we pull out from that point onwards then we will be automatically charged one-weeks rent (£323) - they called this "validation to rent".  I looked online and it says agencies can no longer charge referencing or other fees. Technically no money has been taken yet, so it is not a holding deposit, but is it legal for them to take the money if we hypothetically fail the referencing process? This seems totally wrong! I have since come into many problems pre-tenancy agreement with the agency and would like to pull out but I don't want to get charged. Is this allowed? 

PRAISETHESUN

My understanding is that there are limits to the fees allowed to be charged, but fees for tenant referencing definitely aren't allowed to be charged to tenants (charging those fees to LLs is a different story). A holding deposit to reserve the property is allowed, but this is fully refundable if you pull out before signing anything. They may be allowed to charge some small admin fees if you pull out after signing the tenancy, but not to the amount you've described. 

See here: https://www.gov.uk/government/collections/tenant-fees-act

theartfullodger

Didn't realise that there any reputable lettings agents, large or not.

emimagine18

theartfullodger said:

Didn't realise that there any reputable lettings agents, large or not.

Haha perhaps not reputable, but well-known would be better!

Robbo66

emimagine18 said:

I put an offer in to rent a property with a large, reputable UK agency. My offer was accepted by the landlord. During the offer process, they took my bank details as they said if we fail the referencing/credit check or we pull out from that point onwards then we will be automatically charged one-weeks rent (£323) - they called this "validation to rent".  I looked online and it says agencies can no longer charge referencing or other fees. Technically no money has been taken yet, so it is not a holding deposit, but is it legal for them to take the money if we hypothetically fail the referencing process? This seems totally wrong! I have since come into many problems pre-tenancy agreement with the agency and would like to pull out but I don't want to get charged. Is this allowed? 

Agents can take a holding fee equal to 1 weeks rent. Should you fail the referencing or withdraw then this is non refundable. If the Landlord rejects you application then it is refundable.

saajan_12

emimagine18 said:

I put an offer in to rent a property with a large, reputable UK agency. My offer was accepted by the landlord. During the offer process, they took my bank details as they said if we fail the referencing/credit check or we pull out from that point onwards then we will be automatically charged one-weeks rent (£323) - they called this "validation to rent".  I looked online and it says agencies can no longer charge referencing or other fees. Technically no money has been taken yet, so it is not a holding deposit, but is it legal for them to take the money if we hypothetically fail the referencing process? This seems totally wrong! I have since come into many problems pre-tenancy agreement with the agency and would like to pull out but I don't want to get charged. Is this allowed? 

What exactly do they say about validation to rent and the 1 week amount - please quote. 
Arguably its an agreement to pay a holding deposit, I wouldn't think the timing of when the funds are actually transferred changes the legality. 
They can retain the holding deposit if you mislead or fail referencing, eg if they stated criteria and you say you would meet them but turns out you dont. They can't just spring new criteria or their personal preference as a reason to retain the holding deposit. 

Practically, I would ask them what the criteria is to validate, and agree broad terms eg start date, rent amount ahead of time. Then you can decide whether to go ahead with the referencing (ie if you think you'll satisfy the criteria). If they decline to rent to you then ask why.