Alternative Deposit Options

The Agent sent the Tenant an invoice for rent which did not include a £150 upfront NDO fee or the monthly charge of £35 which was later added by the Agent to a second invoice. The Tenant said that had the fee been included in the original invoice they would have challenged this. The Tenant supported this by explaining that they had previously discussed the NDO with the Agent on the phone and that they had not been informed that there were different fees for six or 12 month tenancy terms, or asked which tenancy term they would prefer.

The Tenant said that they were told by the Agent that the NDO could be amended to a standard security deposit with one months’ notice, however when later requested, the Agent explained that this would not be possible until the end of the tenancy.

The Investigation

The Agent acknowledged their error of sending an initial invoice requesting only the rent balance, which they claimed they followed with an amended invoice to include both the upfront NDO fee of £150 and the monthly NDO subscription of £35. The Tenant claimed they didn’t receive this invoice and the Agent could not evidence that they sent the same.

From the evidence presented, it was apparent that the Agent had not acted in line with their obligations under the Code of Practice, which was to fully explain the advantages and disadvantages of the NDO and how it worked in clear terms to the Tenant and Landlord, before those parties agreed to the arrangement.

While the Adjudicator could not comment on the details of the conversation between the Tenant and Agent regarding the specifics of the NDO, a document signed by the Tenant contained tables breaking down the costs for what the Agent called a ‘NDO Hybrid’ membership. This included options for an upfront fee but a reduced monthly subscription or a higher monthly subscription without an upfront fee.

Upon further inspection, it became apparent that the tables for the NDO did not clearly state which option applied to the six and 12 month tenancies and there was no supporting evidence that the Agent had explained the difference or how the length of tenancy impacted on the Tenant’s payment options. There was also no suggestion that the Tenant had approached the Agent to contact the Landlord about offering a twelve-month tenancy which would have made the NDO option without the upfront fee available to them.

Furthermore, at the point the Tenant requested to move to a standard security deposit option, the evidence showed that the Agent told them this was not possible until the tenancy was renewed following the end of the original tenancy term. Upon checking the tenancy agreement, the Adjudicator found that the Agent had advised the Tenant incorrectly as the tenancy stated that the Tenant may move to a standard security deposit option subject to a months’ notice.

The Outcome

The Agent was unable to evidence that they had clearly explained the correct terms of the NDO to the Tenant. This failure was compounded by issuing an incorrect invoice and thereafter incorrect advice when the Tenant requested the option to move to a standard deposit arrangement.

The Agent’s shortcomings had clearly caused the Tenant avoidable and unnecessary aggravation and inconvenience.

The Adjudicator supported the complaint and made an award of £200 to reflect the inconvenience caused to the Tenant.

Note: Alternative deposit arrangements fall outside of the Tenant Fee Act 2019.