Does landlord or agent keep the holding deposit if a tenant pulls out?

Thanks to those who have posted.

The holding deposit was several hundreds of pounds, so I find it difficult to think of how the agent could justify retaining it for out-of-pocket expenses.

Just to be clear, I'm not suggesting that I should have got the whole of the holding deposit, I am suggesting that the prospective tenant should have got back what the agent retained.

I know the “does the holding deposit fall under TDS” debate is likely to take over this thread, but my question was not about that. However it does give me an excuse to ask to see the agent's holding deposit terms ! I can argue that I need to ensure that the terms of the holding deposit (as presented by the agent) cannot be construed as falling under TDS, as then I become legally responsible, because the law will treat the agent as acting on my behalf. This would enable me to find out their rational for retaining the deposit.

Will report back.

PS Mark. Are you saying that you do actually lodge deposits more than than 30 days after receiving it, but within 30 days of the lease commencing? If so, has anyone challenged you (yet!).

Reply to the comment left by "John Frith" at "04/02/2014 - 11:50":

Hi John

No, that's not what I was saying.

I do not take holding deposits, just referencing fees as a sign of committment. Once a tenant has paid referencing fees I hold the property for them without further charge untiol I get the results of the referencing.

I don't operate in the student market so this is never really an issue for me.

If a tenant wants me to hold onto a property for a month or so I will take a view on that before progressing to referencing. However, given that my strategy is to create high demand I rarely agree to hold a property for more than a few days as I don't enjoy void periods any more than any other landlord. What I have done in the past though if I haven't been able to re-let a property before it is vacated and where a tenant ask me to hold the property for them is to offer to start a tenancy early at a reduced rent for the first month. Tenants also seem to like this as it gives them an opportunity to move in their own time and they feel like they've got a bit of a deal too 🙂
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"The holding fee was several hundred pounds"

No John I'm afraid it was not, it was a deposit and you need to have a serious talk with your agent and sugest they get some detailed TDP training and education if this is their standard practice. And quite how the agent can keep hlf or more of whatever it is, fee or deposit, beats me.

Anyway at that level no way is it going to be a holding deposit and there have been enough discussions on this old subject that it is generally agreed that anything at or above a month's rent is a deposit no matter what you call it.

Romain is almost dead right again and the whole key - it is a very simple and obvious one, to a degree - is what you call it. No way would taking say £1000 as a holding deposit for a property monthly rent £500 and a referencing/application fee of£150 be treated as anything other than a deposit.

Remember the LAW and as clarified in the Localism Act closing all loopholes has demonstrated it is no keener on contrivances
in this connection than any other.

So why risk it by calling what is meant to be a holding FEE or better still, APPLICATION fee, IF that is what it is. If that is not what it is and in your heart you know really it is a deposit or part deposit then no amount of fancy footwork and window dressing will persude a Judge it is otherwise.

Why use the D word at all, ever in connection with a proposed tenancy, actual tenancy or anything else until it is the actual intended deposit. Of course if it already is the intended deposit or part towards it, as Romain correctly says, then you are sunk.

As Romain I think said, why risk it?

By the way the OFT has long ago stated that the only amount that can be retained from any advance payment of any type of application/holding/referencing call it what you will fee is "reasonable costs" incurred in handling the application.

And no, before some wag suggests it, that does not mean you can say the viewing cost £400 of your time!!!

Perhaps this link to the Government website may clarify the question of whether deposit protection is required in the circs, or not as it suggests??

https://www.gov.uk/tenancy-deposit-protection/overview

Reply to the comment left by "DC " at "04/02/2014 - 13:11":

Thank you DC, exactly what I said then, to quote ....

"Holding deposits

Your landlord doesn't have to protect a holding deposit (money you pay to ‘hold’ a property before an agreement is signed). However, once you become a tenant, the holding deposit becomes a deposit, which they must protect."

@ DC

The only opinion that matters is that of a High Court or CoA Judge. CLG can state all it wants what it actually meant to say in its own legislation (pity it didn't) as indeed can I, Mark, any TDP Scheme and Uncle Tom Cobbly and all.

It matters not a jot.

What does matter is the Statute, others that cross reference to it, and Case Law. You may be right, or CLG might (which from memory could be a first) but what is published and you understandably put forward, is just another opinion and nothing more. In fact as it comes from the legislature which the Judiciary hate with a passion it probably does more harm than good.

I suggest anyone doubting this takes a £2500 holding deposit from a group of 5 students this month for a tenancy to start in September with a rent of £1500 a month and gives them a receipt stating it is a holding deposit and watch what happens if you become the test case.

If it ends up in Court I'd rather be prosecuting than defending you!!

@ Romain

You are 100% right in this thread and your opinions deserve more credit than I have hitherto given them - witness the notice periods thread and your lovely word "periodicity" which as has been pointed out to me is in fact a real word. I must use my Chambers or Oxford English dictionaries in future before being critical so quickly.

I owe you an apology which I now offer without reservation.

By the way is depensive (depending on) a real word I dreamt that one up years ago!!

Reply to the comment left by "Industry Observer " at "04/02/2014 - 13:38":

A very noble post if I may say so.

The fact that we have had to agree to disagree on so many things just goes to show what a pigs ear has been made of the drafting on landlord and tenant legislation over the years. This is one of those occasions and I stand by what I have said but accept no liability if others choose to follow my lines of thought.

Given that I have never taken a holding deposit, nor will I ever take holding deposit, I will never be affected even if you turn out to be right on this occasion 🙂 (cheesy grin)
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Reply to the comment left by "Industry Observer " at "04/02/2014 - 13:38":

Thank you for that IO. It is gracefully accepted.

There is no hard feelings on my part, as I am very much in favour of direct, robust debates. I find it helps getting to the bottom of issues and clarifying one's own thoughts and understanding.
In that spirit I hope you did not feel offended by any of my comments, as no offence was meant.

@Mark: You won't find anyone disagreeing with you on the mess that is the legislation, that's for sure.

Mark

I think bearing in mind Superstrike and periodics being new tenancies you mean "...even if you turn out to be right AGAIN...." don't you?!!

Romain

Thanks and of course no offence taken - in fact a bonus another new best friend!!

Reply to the comment left by "Industry Observer " at "04/02/2014 - 15:26":

If the Court of Appeal ever rule that a deposit which was protected within 30 days of the commencement of a fixed term tenancy needed to be re-protected when the tenancy became s statutory periodic I will eat the humble pie you so wish to serve to me on a platter. Meanwhile, I suggest you take it back to your freezer and expect it to stay their ad-infinitum 🙂

Meanwhile, I now have no choice other than to follow your former guidance to re-issue prescribed information within 30 days of the end of a fixed term but this is only due to my|deposits insisting on it and not having the balls to stand by the advice they previously gave to their members.

As you are aware, via offline private discussion, despite my assertions regarding TDS rules, I have implemented safeguards as recommended by my professional advisers to ensure that my tenants are unable to sue me for the deposit plus three times the deposit in the unlikely event of you being proven to be right about the issue and where I did not re-serve prescribed information for tenancies which went periodic before my|deposits changed their rules.
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