Is a 'holding deposit' subject to TDS ?

[IP MAN]

Following what seemed to be a reasonable viewing meeting, I took 50pounds holding deposit from T. I advised T at the time it was non-refundable and T agreed and took no receipt.

Deal was verbally agreed for T to move in after 1week. When T approached there existing LL to ask to leave, their L said 1mnth notice please.

T called me to say he could not afford to lose 1mnth deposit from his current place, and decided not to take up my place.

After some 4weeks T now asking me back for his 'non-refundable holding-deposit'.

When i initially took the small payment I emailed T out of courtesy stating that as private LL i do not take or hold 'Rent deposits'.

There is no paperwork other that small email thread. T now claims i let place out to another T so he wants his money back.

Q. is this small 'holding deposit' considered a payment to be protected by TDS?. There is NO TA and payment was simply a result of positive viewing meeting, but where the tenancy failed to materialize.

T now telling me he's going to small claims court. i told him i'll give back full amount in one month out of pure 'Goodwill', but T demanding in one week. I can afford to give back, but don't like being bullied for offering goodwill gesture, T must be on some other planet.

This is perfect example of how some people treat you for being too nice

[Ericthelobster]

i told him i'll give back full amount in one month out of pure 'Goodwill', but T demanding in one week. I can afford to give back, but don't like being bullied for offering goodwill gesture

If you've already decided to give in, for whatever reason, then why not just hand it over rather than dragging the issue out for however long?

This is perfect example of how some people treat you for being too nice

How have you been "too nice", exactly?

[IP MAN]

thanks for reply, but Q is 50 in TDS or not needed?

[mariner]

A holding deposit cannot be protected in TDS as no T exists.

IP Man appears to be LL, not Agent, took a non-refundable cash payment without receipt or written explanation of 'holding deposit'.
I would be inclined to keep it, esp as it was applicant withdrew but OP has promised to return it within month. If applicant wants it sooner app will have to sue for it's return & front the Court costs.
OP may be have been lucky to avoid this app who appears so short of cash and does not understand the requirements of existing T re Notice.

OP it has been suggested that any non-refundable holding deposit is applied to first months rent or T deposit if application is not withdrawn by them.
Holding deposits are controversial & a source of income for LAs who charge >£50 for this 'service'.
If you take a non-ref holding deposit it is best to explain in writing that you will guarantee applicant first refusal (option) for a period of x days. If he progresses application the holding fee will be used to offset rent or T deposit. otherwise it is forfeit.

[Snorkerz]

I agree with mariner.

The law requires an AST tenancy deposits to be protected, but no tenancy has been created and even if it had, as the tenant isn't living in the property, it can't be an AST.

However, as to the returnability of the deposit - please see http://www.landlordzone.co.uk/forums...d-for-security

[Petetong]

I think there is still alot of ambiguity surrounding holding deposits. The legislation states:

'Any tenancy deposit paid to a person in connection with a shorthold tenancy'

If in doubt, I would always protect. If you are wrong and you protect, you will not be penalised. If you don't protect and you are wrong, then you are potentially liable.

In respect of non-refundable, the OFT are pretty clear that use of such phrase is unfair on the tenant. For example, if you showed the tenant around, he then proceeded to give you a £50 'non refundable' deposit but 10 minutes after he left he phoned to say that he cannot move is it fair that you withhold the £50? What loss have you suffered?