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Agency refuse to refund Holding deposit

Started by kimy1996, March 27, 2024, 09:07:27 PM

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With a friend we made an offer to rent a flat which was accepted except that my friend failed the reference check because her bank is a French Revolut account. So she was not able to connect to open banking and give access to her bank statements and prove her income. We tried everything, she offered to send payslip, employment contract, letter from employer even to come and show them her bank account face to face. They didn't want to know anything.

Following this, the agency offered us to pay 6 months' rent upfront and then the last 6 months at once but for a 2 bed flat it's a huge amount of money and we find it risky to give them so much money at once. she doesn't know anyone who could act as a guarantor. the agency refuses to return the deposit to us they said "The income declared has not been verified and therefore does not match the amount we were expecting, so this payment will not be refunded on the basis that the offer was only accepted subject to referencing, which did not pass". According to the shelter they have no legal reason to keep the deposit given that no inaccurate information was provided. The should have let us know that all applicants must have a uk bank account. I already complained to their property redress scheme who opened a case. But things are so slow. Do you think we have a chance to see our holding deposit back.



The agent is allowed to keep the holding deposit if there is a "difference between the information provided by the tenant and the correct information" or the tenant provides "false or misleading information". Neither seems to be the case here.

The agent is not allowed to keep a holding deposit because "[t]he income declared has not been verified and therefore does not match the amount we were expecting, so this payment will not be refunded on the basis that the offer was only accepted subject to referencing, which did not pass". That's a breach of the Tenant Fees Act 2019.

In fact their explanation is all that's needed to be a breach of the regulations - that's a situation where the deposit has to be returned. The Act, Schedule 2, s3(c) says "[ the person who received the holding deposit must repay it if] the landlord and the tenant fail to enter into a tenancy agreement relating to the housing before the deadline for agreement".

The deadline for the agreement is academic here, but is usually 15 days. A holding deposit is not related to any "offer" or any conditions of an "offer". It's money handed over as a holding deposit.



I would be inclined to make a formal complaint to the agency using their Complaints Procedure, which will be documented on their website. If it's not there, then phone the agent and ask them to send you details of the Complaints Procedure.

In your written complaint, use the relevant words from what @jpkeates says and ask for the immediate return of your holding deposit.

Personally, I would also ask for an additional £25, for example, as reasonable compensation for the illegal retention of your holding deposit and for the time you have had to take making the formal compliant.

Taking this approach obliges them to follow their documented complaints process. And if they don't, you can take it further.

Please don't let them get away with this.

<== See my signature



This has been bugging me. If the agent really thinks that they can keep a holding deposit because the tenant failed referencing, when do they think it would ever be returned otherwise.

They've accepted a potential tenant's offer, subject to references. There are only three possible outcomes. The tenant passes and becomes a tenant (the holding deposit is reused as rent or part of the tenancy deposit), the tenant passes and doesn't become a tenant because they've changed their mind (the agent keeps the deposit) or the tenant fails referencing (because of an actual fail or elapsed time). If the agent thinks that the last option means that they can keep the deposit the deposit would never be returned.

Which is odd because the legislation is all about returning it with some exceptions.


Thank you so much for all the advice I will send them another complaint and see what happens. I will also contact a solicitor to take the matter further in a small claim court


Quote from: kimy1996 on March 29, 2024, 07:18:28 AMI will also contact a solicitor to take the matter further in a small claim court

There's really no need for that yet.

In your formal complaint, just write:

"If the holding deposit is not returned along with satisfactory compensation for illegally withholding it, then I will take action via the small claims court to recover it."

It warns them that you are prepared to escalate things further, however the information that @jpkeates has given you should be sufficient.


I have just contacted the reference company who confirmed that the applicants must have a UK bank account and it is up to the agency to notify this before taking any holding deposit as the referent will fail automatically without that. So they are the one who mislead the information. I will transfer them the referencing company's email and hope they will refund the deposit in full.



It just goes to show that a Landlord must have their wits about them when looking to take on Tenants. Someone has paid for this referencing... which failed... and, yeah, it does come down to the Agent / Landlord preemptively checking the applicant has a UK bank account, so at they have a chance of succeeding - however, I'd likely put that under "reasonable assumptions" myself.

If you're letting a specialised property that always goes to foreign students, then you think differently of course. You're prepared.

But if it's just a run-of-the-mill apartment or house and you've done Right-to-Rent checks (which I don't see mentioned here, so I assume that was never any kind of problem) then it's fair to assume a UK bank account. Certainly applying for property in the UK and willingly entering into referencing would add some responsibility onto the applying party... nothing untoward has been declared... but with the continued rise of connected systems this kind of thing will only become more prevalent, so I wonder how the problematic prospective Tenant intends to remedy this... by always applying for properties seen on a card in the corner shop window only?

At the end of the day, with no leeway from the receiving party, a failed reference check is a failed reference check. Once I knew why it was a failure I'd take steps to ensure that problem doesn't arise again. As a receiving party, though, I wouldn't be so black-and-white, of course.

I have a Tenant moving on, after five years, at the end of this month... this is a timely reminder to me that I pay for referencing and there's no point letting folk mess me around (intentionally or accidentally).


After this incident we viewed other properties and found one (we are moving in 4 days). At each viewing we told our story to estates agents and they were all surprised and found the letting agent completely unreasonable they even told us to fight for our money that we will win at 100%. They also reassured us and offered other alternative as they said London is full of foreigners and they know not everyone has a uk bank account. So I filled a claim for money and will see


I will suggest you keep talking to the property redress scheme and gather any evidence you have. It might take time, but keep at it or you can also consider negotiating with the agency to find a compromise. You could propose providing alternative forms of proof of income or offering a smaller upfront payment as a compromise. If that doesn't work, seek advice from a housing charity or legal advisor on how to proceed with recovering the holding deposit.


Thanks Haven
Just for an update I filled a small claims court and complained to property redress scheme. As soon as they received it they called me and offer to give me back the holding deposit + the fees for the claim + compensation.


Quote from: kimy1996 on June 19, 2024, 01:38:49 AMAs soon as they received it they called me and offer to give me back the holding deposit + the fees for the claim + compensation.

Well done.

A good result, especially the "+ compensation". I'm sure it won't make up for the hassle you have had but it has hopefully made the agency review their policy on Holding Deposits.


Great result. Well done for not accepting being ripped off.

And extra thanks for letting us know!