When prospective tenants are asked to pay a holding deposit, they should ensure that they disclose any information that might affect a landlord's decision whether to offer them a tenancy. Recently, the First-tier Tribunal (FTT) dealt with an application for recovery of a holding deposit paid by a prospective tenant with an adverse credit history.
The tenant asserted that she had paid a holding deposit of £403. Two weeks later, the estate agents informed her and her partner that the landlord would not accept them as tenants because they had failed a credit check. They were offered the option of using the holding deposit for another property and were told that if they did not wish to rent the second property, the deposit was non-refundable.
The estate agents said that, prior to the payment being made, the tenant had been sent a message stating that the deposit was non-refundable if any details she provided were misleading or inaccurate. As she had failed to disclose any adverse credit history on the part of herself or her partner, they were not entitled to a refund of their deposit.
Under Paragraph 9 of Schedule 2 of the Tenant Fees Act 2019, the requirement to repay a holding deposit does not apply if the tenant provides false or misleading information to the landlord or letting agent, and the landlord is reasonably entitled to take the discrepancy or the tenant's action into account in deciding whether to grant a tenancy. The FTT found that the tenant had failed to disclose her and her partner's adverse credit history to the estate agents, and the landlord was entitled to take her true financial position into account in deciding whether to enter into a tenancy agreement. The estate agents were therefore not required to repay the holding deposit.