An Expensive Conversation
Complaint
The day after Mr and Mrs F, the prospective tenants, viewed the property, they paid the Agent a holding deposit of £280. Later the same day the landlord accepted their offer however, the next day, for reasons undisclosed, Mr and Mrs F withdrew from the proposed tenancy and requested the return of their monies. The Agent refused, pointing out that as per the terms and conditions of that payment, following the landlord’s acceptance of their offer, the holding deposit became non-refundable.
Investigation
Whilst the Agent stated that they had explained the terms of the holding deposit to Mr and Mrs F before payment was made, I found that they had failed to provide the prospective tenants with written terms relating to the refund or forfeiture of the holding deposit before both accepting payment and the landlord accepting their offer. As such, I considered that the Agent had failed to act in accordance with Paragraph 6g of the TPO Code of Practice and, instead, had acted unfairly in retaining the deposit in its entirely when Mr and Mrs F had confirmed their withdrawal from the proposed tenancy within twenty-four hours of having paid the holding deposit.
Outcome
Paragraph 6j of the TPO Code of Practice, allows agents to make reasonable deductions from holding deposits in order to cover appropriate expenses. In this case the Agent claimed that they had incurred £280 of costs. I accepted that the Agent may have incurred some costs in respect of processing Mr and Mrs F’s offer however, I did not consider the sum of £280 to be reasonable especially given that the prospective tenants withdrew 24 hours after payment of the holding deposit. Accordingly, I supported the complaint and, taking into account that it was Mr and Mrs F who withdrew from the transaction, directed the Agent to reimburse £180 of the holding deposit.
Learning
Paragraph 6g of the TPO Code of Practice requires agents to ensure that they set out in written form any significant tenancy pre-conditions and terms of the letting, especially those that include any potential liability for fees, prior to an applicant’s offer being formally accepted by a landlord. In this case, whilst the Agent had provided Mr and Mrs F with these terms, they did not do so in written form until after the landlord had accepted their offer. Put simply, verbally informing prospective tenants of the terms of potential fees prior to accepting payment is not acceptable.