Deposit & Holding Deposit

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    Deposit & Holding Deposit

    I have a question about what can be considered a 'holding deposit'.

    I was told by a landlord when I viewed his flat, that in order to secure it, I would have to pay a deposit of one month's rent (£800). This was to become the deposit that he would keep against damages. However, he also said that if I changed my mind and decided not to go ahead, he would keep the full amount of the deposit.

    He also told me that when a previous would-be tenant had failed the credit check, he also kept their deposit.

    Is any of this legal? I understand that letting agencies charge a non-refundable holding deposit which is much smaller than a month's rent, but surely keeping a month's rent is unreasonable?

    #2
    Originally posted by stanley View Post
    I have a question about what can be considered a 'holding deposit'.

    I was told by a landlord when I viewed his flat, that in order to secure it, I would have to pay a deposit of one month's rent (£800). This was to become the deposit that he would keep against damages. However, he also said that if I changed my mind and decided not to go ahead, he would keep the full amount of the deposit.

    He also told me that when a previous would-be tenant had failed the credit check, he also kept their deposit.

    Is any of this legal? I understand that letting agencies charge a non-refundable holding deposit which is much smaller than a month's rent, but surely keeping a month's rent is unreasonable?
    In a word, "not really".
    1. What does the deposit do?
    2. If it creates a contract, L can't retain deposit just because you don't proceed. He could keep it as a bond, during a letting, but would have to refund it at end (minus only any arrears, or cost of breakages/breaches).
    3. If it doesn't create a contract, L can't retain it either.
    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
    2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
    4. *- Contact info: click on my name (blue-highlight link).

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      #3
      See this thread:
      http://www.landlordzone.co.uk/forums...ead.php?t=4759
      All posts in good faith, but do not rely on them

      * * * * * ** * * * * * * * * * * * *

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        #4
        Good link Bel .....

        Think Paul's post states the situation clearly

        Originally posted by Paul_f View Post
        The agent might want a (holding) deposit, and not as you appear to think a dilpidations deposit. The holding deposit is usually used as the first month's rent. If there is a clause in the agent's terms saying if your daughter fails to go ahead and the deposit is "forfeited" that is an unfair term as it is a "penalty" rather than a reflection of the agent's actual costs which is all he can mitigate. It's how it's worded that counts and most agent word it badly!

        Look at the Unfair Terms in Consumer Contract Regualtions 2005 regarding tenancy agreements which you can download from the OFT website. It's 127 pages though but does give good examples of unfair terms from about Page 76. http://www.oft.gov.uk/Business/Legal/UTCC/guidance.htm
        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.

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