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

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

8:43 AM, 4th February 2014, About 11 years ago 56

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Should a holding deposit be retained by the agent or the landlord?

A tenant paid my agent just under two weeks rent as a holding deposit, but a week later had to pull out due to personal circumstances. I told the agent I expected an amount equal to a weeks rent (being the amount lost due to the property being off the market). The agent agreed to pay me a little less than that, and I presumed that they had paid the remainder back to the person who backed out. Does landlord or agent keep the holding deposit if a tenant pulls out?

I was surprised to later discover that the agent retained the full amount, which seems unethical. I can understand them retaining an application fee, but not a holding deposit – after all it’s my property it is holding! I do not know if they charge a letting fee (nothing on the website) and I’ve not seen the terms of the holding deposit – it may say they will retain it in these circumstances. No mention of holding deposit in their terms with me. I would like to challenge this on principle, but I’m loathe to, as I’ve had a good working relationship with them up to now.

Any voices of experience or wisdom?

Thanks

John Frith


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Ewan Foreman

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16:01 PM, 3rd March 2014, About 11 years ago

Holding deposits or tenant fees of any sort are now illegal in Scotland as you may know. So what has happened? Has every letting agent in Scotland died a slow death as a result of the Scottish Government introducing "no more fees" tenant protection legislation last year?

Not at all. The industry has adapted and aggressive operators are now finding it harder to get a foothold in what is still a fairly unregulated industry. Many take the view that the Scottish Government have over-reacted. Nevertheless, it seems likely that the private rented sector will continue to be subject to increased regulation in all parts of the UK and running a business which depends on unreasonable tenant fees is therefore not advisable in my view.

Mark Alexander - Founder of Property118

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16:52 PM, 3rd March 2014, About 11 years ago

Reply to the comment left by "Ewan Foreman" at "03/03/2014 - 16:01":

Hi Ewen

I agree, but what's the definition of "unreasonable"

I think that expecting an agent to charge tenants nothing and to charge landlords more whilst expecting the landlord not to pass on his extra costs by way of rents is unreasonable, don't you?
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Ewan Foreman

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18:23 PM, 3rd March 2014, About 11 years ago

Reply to the comment left by "Mark Alexander" at "03/03/2014 - 16:52":

We have of course got used to no tenant fees here in Scotland because we have no choice. All I was really trying to do was alert people to the fact that even reasonable fees are not a given in the future. We used to charge (modest) tenant fees when we were allowed to. Because our fees were modest we had no great height from which to fall when they were removed. UK governments (and especially a labour government) could come under intense pressure to assist PRS tenants and burning letting agent fees would likely gain more votes than it lost!

Mark Alexander - Founder of Property118

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18:27 PM, 3rd March 2014, About 11 years ago

Reply to the comment left by "Ewan Foreman" at "03/03/2014 - 18:23":

Who's taken the hit in Scotland then Ewan, has it been agents, landlords or have/will all the costs end up being passed on to tenants in the form of increased rents?

Same question for landlord registration I suppose.
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Ewan Foreman

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22:46 PM, 3rd March 2014, About 11 years ago

Agents took the entire hit. Rents are rising, landlords are paying a bit more in fees and agents are earning less. The removal of tenant fees also came at the same time as the mandatory custodial tenant deposit scheme and some found the heat too much and sold up - a few went out of business.

Mark Alexander - Founder of Property118

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22:57 PM, 3rd March 2014, About 11 years ago

Reply to the comment left by "Ewan Foreman" at "03/03/2014 - 22:46":

Wow that's shocking.

So what is the typical earnings model for a letting agent in Scotland these days?

Are there any online agents left in Scotland? If so, how do they operate?
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