The ARC Guide to TENANCY HOLDING DEPOSITS

The ARC Guide to TENANCY HOLDING DEPOSITS

LOOKING FOR A HOUSE? WHAT IS A HOLDING DEPOSIT AND SHOULD YOU PAY IT.

Some agencies ask prospective tenants to pay a holding deposit to 'reserve' a particular property while references are checked and the tenancy agreement is drawn up. Usually the amount of the deposit is around £100 to £200 for the property.

You might be told that paying a holding deposit will result in the property not being shown to other prospective tenants. The property however may be advertised with other agencies so it may not be “off the market” at all. The landlord him/herself may not be bound by your letting agent’s promise and may invite other prospective tenants to view or enter into agreement.

Therefore if you wish to pay a holding deposit, make sure that letting agents are able to guarantee that the property will be genuinely reserved for you and that it will not be on market.

Always ask for an invoice which contains clear terms; in what circumstances the holding will be refundable or non-refundable. Make sure it is signed, and the signature is also printed so it is clear who has taken the money. Do not be embarrassed to ask for this; it is after all YOUR money and you are entitled to know the terms and conditions of the transaction.

Any holding deposit that you pay should be deducted from the tenancy deposit you have to pay before moving in.

If you do not move in after all, the holding deposit is not likely to be returned to you. However, there are exceptions:

• if the landlord or letting agents choose not to go ahead with the tenancy, you should receive a refund of all pre-payments.
• if you are not able to move in because of reasons beyond your control (for example, if you are hospitalizedor if the property is not fit to live in at the start of the tenancy ) it may be unfair for the agency not to return your holding deposit.

The Office of Fair Trading (OFT) has issued Guidance on Unfair Terms in Tenancy Agreements. One of its concerns is to ensure that any charges or penalty payments arenot disproportionately high.

Paragraph 3.42 of this Guidance further states “Where cancellation is the fault of the tenant, the landlord or agent is entitled to hold back from any refund of prepayments a reasonable sum to cover either the net costs or the net loss of profit. Tenants would be at fault if, for instance, they gave false or misleading information, but not merely because the landlord thought their references were not sufficiently good.”

The agency or the landlord are normally perfectly entitled to charge you whatever they wish; it is up to you to agree or not to those charges if you find them acceptable or not. The key is to ASK, UNDERSTAND, DISCUSS and then, only then pay any deposits or charges and finally sign the agreement.

ASK to see a breakdown of any possible charges. Make sure you UNDERSTAND the breakdown and that there are no vague and unclear terms. DISCUSS those extra charges with your prospective housemates, to make sure everyone is happy and can afford them.

If you had to pay unreasonably high charges or the agency did not give you full details of the charges in advance, you may be able to challenge the charges on the grounds they are unfair.

If you believe an agency is acting illegally you can make a complaint and report them to your local council's trading standards department or tenancy relations officer.

We will be happy to assist you further if you have any queries. You can contact us by email: , or by calling us on 01895 269 169.

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