Holding Deposit and Pre-Tenancy Conditions
Complaint
The prospective tenant, Miss F, paid a holding deposit and administration fees to the Agent on the condition that the landlord agreed a break clause which met her employer’s approval. Miss F asserted that an agreement had been reached that if this requirement proved impossible she would get her money back. Unfortunately, following a suitable break clause not being agreed, Miss F withdrew and the Agent stated that they would only refund half of the monies.
Investigation
The Agent produced a draft break clause which fell well short of the employer’s known requirements, however they argued that only a 50 per cent refund should occur as they felt they should have been given a chance to negotiate the wording further. Aside from the fact such negotiations did not form part of the conditions attached to Miss F’s offer, given the overall handling of her offer, I considered that Miss F had justifiably concluded that she could not continue to deal with the Agent with any confidence. The Agent had variously disputed what rent had been offered and agreed, she had been given no receipt for her money when she paid, she had to pay in cash, she had not been given a copy of a specimen tenancy despite repeatedly asking and she had not been given any written explanation of the holding deposit terms or record of her offer. Indeed, Miss F’s confidence was exhausted when, two days after paying her holding deposit, the Agent sent her written terms showing she would lose all her money (which was a four figure sum) if she withdrew, in total contradiction of their verbal agreement pertinent to agreeing a suitable break clause.
Outcome
Given that the Agent sought to renegotiate the conditions of Miss F’s offer after it had been accepted and a holding deposit taken, I considered it reasonable for Miss F to withdraw from the transaction without any financial penalty. As Miss F simply requested the return of the monies paid, I directed the Agent to refund her the full balance of £1,225.
Learning
Once an offer has been accepted and a holding deposit paid, it is simply not acceptable to renegotiate the conditions of the proposed tenancy unless referencing results indicate further action is required. Agents’ terms and conditions in which they seek to obtain holding deposits should reflect these circumstances.