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

Reply to the comment left by "Gary Nock" at "08/02/2014 - 20:34":

Hi Gary

I still support that view in this thread, however, as Industry Observer points out, it is just my opinion. The fact that my opinion is the same as the one on the CLG website apparently has no relevance and only a Court of law can decide. On that point the opinions of Industry Observer must be noted and a commercial view must be taken.
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One needs to look at the definition of a tenancy deposit (quoted by John previously).

As said, a holding deposit is not usually related to any obligation under any AST for the simple reason that no AST has usually been agreed when the holding deposit is paid: if it is a security it is therefore certainly not a security for obligations under an AST!

If holding deposits were tenancy deposits they would require protection no matter what, even if fully refundable (a tenancy deposit is also fully refundable after all).

Reply to the comment left by "Romain " at "09/02/2014 - 11:28":

Hi Romain. You and Mark may be right, but I am not so sure as you that the AST has not been "agreed". I'm pretty sure that a verbal agreement is still binding , so the fact that nothing has been signed isn't relevant . I also favour the view that even if references haven't been completed that the "intention" is still there, and even though the agreement has only been "part executed" - the TDS legislation applies even at that stage.

I also suspect that the people who dreamt up the legislation would have intended it to apply to holding deposits, despite the inconvenience to us landlords.

As an update, I saw the agents terms of the holding deposit, and it clearly states that all monies are held on behalf of the landlord, so I have written to them suggesting:

1) that by saying the 30 days start when the security deposit is fully received they are misleading landlords into a situation where they could be sued, and
2) that as the holding deposit was in my name, it is my decision what happens with it, and I say that legally and morally, the tenant should get back what the agency has currently withheld.

I'm not sure my relationship with the agent will survive this!

Reply to the comment left by "John Frith" at "09/02/2014 - 21:16":

Mary Latham should know what the intention was, she was party to the meetings and the drafting on the legistlation!
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John I am curious to know how this turned out?

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Hi Mary,

Yes, I've just about come to the end of this incident.

I saw the holding deposit terms and it was (to me) a real mismash, but the most relevant point was that it said clearly, and several times, that any money received by the agent was being held on my behalf. The money could go against the deposit, the letting fee, or an agency fee (whatever that is).

I wrote saying that:
1) By NOT notifying landlords that the 30 days began when the holding deposit was received, they were exposing landlords to the possibility of being sued.
2) The terms stated that they could retain the holding deposit if the tenant backed out. I linked to the OFT document about unfair terms and conditions, and pointed out that they should return the surplus funds (£148) to the tenant.

On the 1st point, they contacted their own solicitors, who just wrote to them saying that a holding deposit was NOT subject to TDS, and the agents accepted their word, despite me citing the letter of the law that said otherwise. They did agree to indemnify me against being sued by tenants. Not sure how that will work out.

On the second point, they claimed the £148 for their costs (letting fee and agency fee), which I couldn't argue with. I did point out that it was unnecessarily confusing to lump their fees (which is a matter between them and the tenant) in with money for the deposit against the property, especially as it was all identified in the T&C's as money being held on behalf of the landlord.

I'm not holding my breath that they will do anything about it. I suspect they just see me as being akward.

Reply to the comment left by "John Frith" at "24/02/2014 - 10:05":

Time to change agents John?
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I'm going to stay. They have been good otherwise, and I'm not sure another agent would have a better understanding. Better the devil you know, and all that.

Reply to the comment left by "John Frith" at "24/02/2014 - 12:39":

Hi John.

Thanks for updating us about this incident.

We disagree with the way your agency acted and have never done nor will ever do it ourselves - despite the fact that the practice does seem to be common, per this news item today:

BBC finds 500 cases of lettings agents refusing to return unused 'holding deposits' & fees [VIDEO 2:32]
http://www.bbc.co.uk/news/business-26365397

Reply to the comment left by "Theodore Brown Property Management" at "27/02/2014 - 14:58":

Just to clarify, the article you link to is about agents cancelling the agreement, but failing to return the holding deposit. With my case, the would-be-tenant pulled out for personal reasons.

I think my agent is misguided, but I don't think they are deliberately deceptive.