Holding deposits

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    Holding deposits

    I am marketing my property with multiple agents, and two of them have found prospective tenants who are very interested, to the extent that both are willing to put down holding deposits with the respective agents.

    As neither of the applicants have been referenced yet, I am reluctant to turn either away in preference to the other at this stage, so am considering suggesting both put down holding deposits (thus I would of course stop all further viewings) and waiting until the references are through so I can make a decision then.

    I don't think there's anything legally to stop me doing this, but does it seem unfair on the applicants at all? At the end of the day, the unsuccessful applicant (which may be both of them of course) would get their deposit back if it's me that pulls out rather than them.

    Opinions welcomed.

    #2
    I've seen agents take holding deposits from multiple tenants, say reference the first lot, if they come up to scratch then everyone else gets their money back with no deductions.

    If the first lot fail their reference checks then they obviously lose their deposit and you start on with the next lot.

    It needs to be made very clear to everyone in writing up front that they forfeit the deposit only if they fail the referencing.

    Comment


      #3
      If you take a holding deposit that is non_refundable should the tenant pull out, you must offer equivalent compensation to the tenant if you pull out.

      Statutory Instrument 1999 No. 2083
      The Unfair Terms in Consumer Contracts Regulations 1999
      SCHEDULE 2 1.(d)

      Comment


        #4
        @Energise

        Agree it would seem fair the landlord should give some compensation if he takes a deposit and pulls out of the contract without a valid reason. (e.g other than things like credit and reference checks being unsatisfactory)

        If multiple deposits are being taken then it would seem to be fair that the second party are advised that someone else has already placed a deposit. Perhaps only ask a nominal deposit to cover admin and credit checks if the second party are really keen.

        Should the deposit be "open plan" ? We accept deposits on the understanding that subject to satisfactory references we will both sign the AST with seven days. Is this reasonable?

        The landlord is losing rent for every day the property is on hold so it doesn't seem fair that a deposit can hold the property indefinitely.

        Taking multiple deposits especially of substantial sums of money seems very unfair on the second prospective tenant. It sterilises his/her ability to proceed should another suitable property come up.

        Our most recent tenant was so disappointed to have missed first bite at the property. We contacted them as soon a the first prospective tenant dropped out and they did everything possible to get the references in promptly to enable signing within a week. Their delight at getting our property was a pleasure to see.
        Vic - wicked landlord
        Any advice or suggestions given in my posts are intended for guidance only and not a substitute for completing full searches on this forum, having regard to the advice of others, or seeking appropriate professional opinion.
        Without Plain English Codes of Practice and easy to complete Prescribed Forms the current law is too complex and is thus neither fair to good tenants nor good landlords.

        Comment


          #5
          Originally posted by Worldlife
          Should the deposit be "open plan" ? We accept deposits on the understanding that subject to satisfactory references we will both sign the AST with seven days. Is this reasonable.
          I cant see how a holding deposit can be taken before a tenant has been accepted by a landlord, its got to cut both ways, how can you be holding it if for them if you haven't even accepted the tenant yet?

          (eg. you change your mind about letting the property and simply say the references are unsatisfactory)

          Comment


            #6
            In the past we have not taken "holding" deposits and the full deposit and one month's rent in advance has been paid by cleared cheque, cash or bankers draft on or just before the date the keys are handed over the AST having been signed.

            On recent letting we had three tenants each wanting to put a non-returnable "holding" deposit of £200 on the property. If the letting went ahead that "holding" deposit would become part of the AST deposit. I got the impression "holding" deposits were required by most rental agents in our area.

            I felt each of the prospective tenants were enthusiastic and wanted , by the deposit, to show their committment.

            I agree such genuine interest is open to abuse.
            Vic - wicked landlord
            Any advice or suggestions given in my posts are intended for guidance only and not a substitute for completing full searches on this forum, having regard to the advice of others, or seeking appropriate professional opinion.
            Without Plain English Codes of Practice and easy to complete Prescribed Forms the current law is too complex and is thus neither fair to good tenants nor good landlords.

            Comment


              #7
              Energise is quite right about the UTCCR's when taking deposits.
              Nobody has yet mentioned the magic words "subject to contract", and if not used by the agents could plunge the landlord into a dilemma and possible additional costs. Multiple agency is fraught with problems and you should make it clear to all the agents you use what your criteria is with regards to more than one applicant.

              You can't incidentally tell an applicant that deposit monies are "non-refundable", it's an unfair penalty on the applicant - UTCCR's once again!
              The advice I give should not be construed as a definitive answer, and is without prejudice or liability. You are advised to consult a specialist solicitor or other person of equal legal standing.

              Comment

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