Letting agents holding money | The Tenants' Voice
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Letting agents holding money

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596 views 1 replies latest reply: 23 May 2014

We are form the US so are not savvy about practices here in the UK. We paid a letting agency £800 deposit- they looked for a flat for us. A flat was offered at £400 p/w. Being form abroad I did not understand that this amount was calculated across 52 weeks and then decided into months, so when the contract came I was surprised to see just how much it came to per month. Much too much for us. We have not signed the contract and want to let the agents know that this is not what we want but we are not sure if we then lose our deposit. To be clear we had not signed the contract and had not seen the final figures.We are not comfortable with the agents as they are quite over bearing- do we have a right to the deposit back if we did not take the property? How can we phrase this to the agents so they are clear that we are informed about the law here.

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Hi, thanks for posting in our forum.

In theory, if a tenant decides not to go ahead by an agreed date, the holding deposit, (or part of it) can be retained against administrative costs that have been incurred.

If a tenant has paid a holding deposit and subsequently decides not to take on the tenancy, the landlord/letting agent is likely to try to retain the holding deposit to offset costs and losses. In most cases however, they can only legally retain an amount that is equivalent to the reasonable cost of re-advertising the property. Landlords cannot retain holding deposits to offset rent loss whilst the property is empty.

There is no set formula for working out how much a holding deposit should be, although one week’s rent is commonly used as a guide. It should be an appropriate amount of compensation for the landlord’s loss, should the tenant change their mind at short notice.

Perhaps you were charged 800 pounds as you were not British citizens, but you should be able to negotiate a part refund. Check any paperwork you received with the receipt of the deposit money with regard to the letting agent policy.

If the landlord changed any of the terms and conditions of the offer of tenancy after the holding deposit was paid and you decline the tenancy in view of these changes, all of the holding deposit must be returned.

If the letting agent is refusing to return part of the money, you can always make a formal complaint to the Property Ombudsman, or follow the company’s formal complaints process. It should be on their website or ask for it directly.

We wish you the best of luck. Do let us know how you get on.

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