Upon instruction the Landlord, Mr E, agreed with the Agent that prospective tenants would be charged a holding deposit which, in the event that the tenancy did not proceed, would be divided up with £200 due to him and £100 to the Agent. A prospective tenant was found who paid the £300 holding deposit but had to withdraw from the tenancy after subsequently losing his job. The Agent refunded the full £300 and Mr E complained that he had not received his £200.
After considering the documentary evidence, it became apparent that the prospective tenant had withdrew from the tenancy only four days after paying the holding deposit. Furthermore, it was also apparent that the potential tenant had yet to complete and submit an application form for the tenancy.
I was satisfied that the Agent had acted appropriately in the circumstances, which was in accordance with OFT guidance and the TPO Code of Practice. I was not persuaded that Mr E had been financially disadvantaged in the short period of time between the monies being paid and the potential tenant withdrawing. This was especially true in light of the Agent’s policy not to remove the property from the market until the holding deposit had cleared and the application form had been returned in order to commence referencing. As neither had occurred prior to the potential tenant’s withdrawal of his offer, I was not persuaded to support the complaint.
In this case, given that the Agent had incurred no administration costs and Mr E had not suffered any loss of marketing, it would not have been either fair or reasonable to retain the holding deposit. This is especially true given that the prospective tenant had yet to formally apply for the tenancy by completing the appropriate forms. As per Paragraph 6j of the TPO Code of Practice any deductions from holding deposits for administration costs must be fair, reasonable and take account of the actual work completed.