Upon application for the tenancy, the prospective tenants, Mr and Miss D, were charged a holding deposit/administration fee of £500 which, following their references being declined, was withheld by the Agent. Mr and Miss D complained that the fee was unfair, especially as the Agent had not fully considered all of the referencing information provided.
From the documentary evidence provided, Mr and Miss D had failed referencing following the Agent receiving a report highlighting that Mr D was committed to his existing tenancy for another six months. However, I also observed that the Agent had received a letter from the letting agents for Mr D’s existing tenancy showing that an early release would be agreed if Mr D found a suitable tenant to take his place. I considered that the Agent had not taken into account the circumstances of the situation in declining the application and withholding the holding deposit in full. Further, whilst I agreed with the Agent that the agreement with the prospective tenants clearly explained this charge, it was also clear that the fee contained a degree of penalty and excess profit, given that if the tenancy had proceeded to completion, the fee would reduce by £150.
Paragraph 6j of the TPO Code of Practice requires that deductions from deposits for administration where a tenancy does not proceed must be fair, reasonable, take account of the work done and the facts of the situation. On this basis, I directed the Agent to refund £150 of the holding deposit and made an additional award of £100 compensation for the fact that the Agent had also continued marketing the property after taking the holding deposit and had thereafter encouraged Mr and Miss D to apply for another property with every prospect that they would forfeit yet another £500, given that their references were unchanged.
It is simply neither fair nor reasonable to charge consumers for work which has not been undertaken or to charge two differing fees for the same service, with one carrying an element of penalty.