Letting agent keep £2000 deposit because of failed reference check

[JD0963]

Hi, myself and my partner just put a deposit down on an apartment which isn't available until the 7th of July. The letting agent has just sent us through the holding deposit T&C which states the following..

 

"

Should the applicant withdraw the application or fail their referencing, which is at the landlords discretion and in this event be unable to provide a guarantor suitable to the landlord, the deposit will not be returned"

 

Is this common practice? Surely that's a HUGE gamble with money?? I don't mind losing the fees but the entire deposit as well? Shouldn't they usually take this AFTER the checks have been carried out?

 

Any help would be much appreciated before I sign these forms!

 

Many thanks!

[king12345]

Hi, myself and my partner just put a deposit down on an apartment which isn't available until the 7th of July. The letting agent has just sent us through the holding deposit T&C which states the following..

 

"

Should the applicant withdraw the application or fail their referencing, which is at the landlords discretion and in this event be unable to provide a guarantor suitable to the landlord, the deposit will not be returned"

 

Is this common practice? Surely that's a HUGE gamble with money?? I don't mind losing the fees but the entire deposit as well? Shouldn't they usually take this AFTER the checks have been carried out?

 

Any help would be much appreciated before I sign these forms!

 

Many thanks!

 

Yes, you've come across a rogue landlord and an even more rogue estate agent.

I, as a landlord, only take a deposit after all checks have been done successfully.

This makes me think that anyone with an empty flat could take multiple deposits from potential tenants and then fail all of them on reference or guarantor stage, ending up with a larger profit then rent and no tenants to worry about.

IMO it's a sc@m

[JD0963]

We have already paid it now. Would we be protected in any way? Very concerned as we have thousands to lose.

[steampowered]

That part of the T&Cs is pretty outrageous. It purports to essentially allow the landlord to keep the entire deposit for any reason he wants (given that failure of referencing is stated to be in the landlord's discretion).

 

The good news is that it won't be legally enforceable. It is quite plainly an unfair term contrary to the Consumer Rights Act 2015, and hence if the agent/landlord try to keep your money, you will almost certainly be able to successfully bring a court claim to get that back.

 

I think this is sufficiently bad that you should report it. Please report it to the CMA here (https://www.gov.uk/government/publications/report-anti-competitive-or-market-issues-to-the-cma and http://www.which.co.uk/consumer-rights/letter/letter-to-report-unfair-terms-to-the-cma), and also to your local trading standards.

 

Why don't you name and shame the letting agent? Not the landlord though. The landlord might not have ever read the letting agents T&Cs and could be a perfectly decent landlord.

[stu007]

Hi

 

Also contact the Local Councils Private Housing Dept to see if Landlords need to be registered, if so report what has happened to them.

[Andyorch]

http://www.propertyinvestmentproject.co.uk/blog/regulated-letting-agents/

[slick132]

The article is headed, "Make Sure Your Letting Agent Is Regulated By A Redness Scheme"

 

:lol:

[legalistic]

I can't see that the Competition and Markets Authority has anything to do with it. JD0963, estate agents are required to be regulated by a redress scheme. There are several such schemes at least one of which has a blacklist of estate agents. You haven't lost any money yet and it would probably be unwise to go complaining anywhere at this time. I would, though, give the estate agent a strong hint about what you think of the offending part of the Ts and Cs.

[steampowered]

I can't see that the Competition and Markets Authority has anything to do with it.

I suggested a complaint to the CMA because the CMA is the regulator responsible for enforcing the law on unfair contract terms in consumer contracts. See http://www.legislation.gov.uk/ukpga/2015/15/section/70/enacted and http://www.legislation.gov.uk/ukpga/2015/15/schedule/3/enacted.

 

This used to be done by the OFT, but the OFT has now closed.

[legalistic]

steampowered, I don't know that much about consumer law as I don't find it interesting. But the CMA does not, apparently, deal with individual complaints: https://www.gov.uk/government/organisations/competition-and-markets-authority/about

[steampowered]

steampowered, I don't know that much about consumer law as I don't find it interesting. But the CMA does not, apparently, deal with individual complaints: https://www.gov.uk/government/organisations/competition-and-markets-authority/about

That's right, the CMA acts on behalf of consumers generally rather than individual consumers. Reporting to the CMA won't help the op immediately but I think it is still helpful.

 

At the risk of going on a tangent, the example I would give is the gym membership case from a couple of years ago. The OFT (which has now passed its functions to the CMA) felt that a lot of gym membership contracts contained unfair terms about making it difficult to cancel gym memberships. The OFT obtained an injunction requiring specific gyms to change their terms and preventing those gyms from trying to enforce those terms against consumers. Alongside that the OFT issued guidance making this position clear to all other gyms.

 

I would love to see the same thing happen with estate agents. Bad practice is rampant in the letting agent industry and so I would not be surprised if the CMA is looking at taking action against letting agents. To me, this letting agent's T&Cs are so obviously an unfair term and so obviously abusive of consumers that I can see them being a prime target for action by the CMA or inclusion in a test case. Reporting them to the CMA is really easy, just filling in a short form, so it would be good to put this letting agent on the CMA's radar.

 

The other thing the CMA can do is issue guidance which puts it in black and white saying that this type of condition (i.e. that you lose your deposit if you fail referencing) is unfair and cannot be enforced against consumers. Again this will only happen if enough people complain. The OFT's unfair terms guidance is 8 years old and is due for an update!