Key Topics: Fee Transparency, Holding Deposits, Advertising
Three friends found a property to move into together. After making their interest in the property clear, they felt bombarded by calls from the Agent insisting that they hand over money imminently to secure the property.
They each paid a £150 holding deposit and were asked to sign an e-agreement relating to the terms and conditions of their holding deposit. The agreement was sent around one by one – when the document reached the 3rd Tenant she refused to sign it, having noticed a series of discrepancies in what she had read on the Agent’s website and what was stated on the documentation.
The 3rd tenant noted that on the Agents website it stated clearly that bills would be included however the e-agreement said bills were not included. Furthermore, the website stated that ‘no bonds were to be paid in advance’ yet, having each already paid a holding deposit, the tenants had received an email requesting a further £280 refundable deposit.
After querying with the Agent what this further £280 was for, the Agent was unable to provide a straight answer. The Agent finally relented that it was, in fact, a bond which conflicted with the website advertisement. The tenants were told that this was a special instance and if they did not pay the £280 within 7 days they would lose their holding deposit. Feeling confused and misled, the tenants decided not to proceed with the tenancy.
The Agent refunded the 3rd Tenant’s deposit but withheld £300 based on the first two Tenants signing the agreement. The Agent claimed that the contradictions on the website had been explained to the applicants verbally at the time and that they had incurred significant costs in setting up the tenancy which justified their claim to the holding deposit monies.
Email correspondence, Holding Deposit Agreement, Website Snapshots.
Case Assessors Plan
- The Agent’s holding deposit agreement stated that the holding deposit was ‘non-refundable’. The PRS consider this term to be unfair in general, in accordance with the CMA Guidance for Lettings Professionals. Though holding deposits are there to cover an Agent’s reasonable costs if the Tenant pulls out, terms that allow an Agent to withhold a deposit without a clear justification will not be upheld by the scheme.
- As the Tenants pulled out within 48 hours and the tenancy was not due to commence for several months, it was unlikely that any significant costs had been incurred and the Landlord would not lose any rent. It also appeared that the Tenants had felt pressured into paying the fee without being given sufficient time to make an informed choice.
- Though the Tenants had committed to the tenancy with a holding deposit, they felt obliged to pull out as there were ‘surprise’ additional costs which could not be properly explained. Even if the intention was not to deliberately hide additional costs, the Agent acknowledged that the website information was not correct. It was deemed understandable that the Tenants felt misled and did not want to proceed with the tenancy on that basis. As a result, the Case Assessor recommended that the £300 be returned to the two tenants.
Key Points from the Case
- The Agent should be upfront about all non-optional fees that may be chargeable throughout the tenancy. This is to enable the Tenant to compare the full cost of renting one property against another.
- The Agent should not seek to mislead Tenants - this may include leaving out important information, or providing information that is unintelligible or ambiguous.
- It is just as important that fees are accurately displayed on a website or any other advertising material as it is on an agreement or in the Agent’s office.