Samuel33 there you go good result They are on it
1 Like
well not quiteā¦ they did advise him that a tenancy had been created and a deed of surrender would be needed. 
1 Like
Ordinarily, a tenancy is only created once the tenant takes possession of the property or the tenancy agreement is signed as a deed. Iām not sure either has happened has it? If not, then Iām surprised theyāre recommending a deed of surrender as there may not yet be a tenancy. It also requires the tenants agreement so you lose control of the situation. I would suggest you take legal advice from a landlord and tenant solicitor as there may be an option for you to just not proceed with the tenancy. This would be a breach of contract and the tenant could sue you for their costs, (which should be minimal and they would have to mitigate them), but if you really want to end this now before it goes any further, it may be your best option.
The holding deposit can also only be retained for 15 days by default, although this can be varied by agreement. You should check with Openrent whether a different period has been specified. If not, then that would need to be returned to the tenant, along with the months rent they paid you.
1 Like
why return holding deposit when tenant did not take up tenancy in a timely manner and has not communicated for nearly two weeks?
1 Like
Because if its held for more than 15 days, (or whatever period has been specified as the deadline for agreement), it must be returned to the tenant. If Samuel33 makes the decision not to proceed with the tenancy, this would be another reason.
Just to be clear on OpenRentās position here, the option to set a 96-hour deadline is only made available when the final balance has not yet been paid and the contractual move-in date has passed. The main purpose of this is to assist in terminating the contract where the tenant is not responding.
Separate from this, a holding deposit can also only be claimed by the landlord when the deadline for agreement has passed and the tenant has not taken necessary steps to enter into the agreement (i.e. paying the final balance). In this case, both the move-in date and the deadline for agreement have elapsed.
Iāve reviewed the communication here and can see that OP initially asked our team how the contract could be terminated; for which a deed of surrender is correct.
As always, we recommend parties take independent legal advice where appropriate.
1 Like
ā¦ unless the tenant decides not to rent the property which they have by default in this case. That is a valid reason for keeping the holding deposit.
1 Like
sounds as if no one really knows the answer?
Shelter doā¦ so Iām just wondering why David122 disagrees with them. He may well be right though as heās one of the wisest posters here.
These are the 4 reasons commonly cited for retaining the holding deposit if you look online (and Shelter for whatever reason donāt list these all)
āUnder the Tenant Fees Act, there are only four grounds upon which a holding deposit can be retained by the letting agent or landlord.
These are:
-
If the tenant fails a Right to Rent check;
-
If the tenant provides false or misleading information;
-
If the tenant pulls out of the application process before the deadline for agreement (15 calendar days after the holding deposit was taken to when the contract is signed and dated by both parties);
-
If the tenant fails to take all reasonable steps to enter the tenancy agreement.ā
Retaining and Returning Holding Deposits Under The Tenant Fees Act https://share.google/rizveA9AqatwFzV59
In this case it is the 4th reason, lack of all reasonable steps - that applies, as well as not maintaining contact they have not paid a deposit which is one of the reasonable steps they need to take.
If Iāve read the openrent page āLandlordās Guide to Holding Deposit, Tenancy Deposit, Rental Fees Landlord's Guide to Holding Deposit, Tenancy Deposit, Rental Fees ā correctly, the 15 days is about the initial time for LL to accept the application and nothing to do with what happens later. In this case that has happened ie application was accepted. The issue is that since that and before the tenancy was due to begin, the tenant has broken the contract by not paying the amounts due and therefore the tenancy has not begun with no keys handed over. The same page says
āIf the tenancy doesnāt go aheadā¦
If the landlord decides not to proceed, the holding deposit should be refunded in full. Since the Tenant Fees Act, landlords cannot deduct any fees ā¦
If the tenant decides not to proceed, the landlord or agent can keep the holding deposit. However, there might be a chance of getting some or all of it back, so itās worth asking for a refund.ā
And tenant has effectively decided not to proceed by not staying in contact and failing to pay what is dueā¦
Thanks so much to everyone for their input here. The tenant defied the odds and paid the outstanding balance before the 96 hour deadline (at the 11th hour). Still havenāt received communication from them, but at least thereās rent thats secured.
Canāt thank you all enough for your insight as I really was unsure what situation non payment might leave me in - and as itās been revealed from the message chain, itās quite a precarious (though unusual and rare) position for the landlord to be in between contract signing and payment.
Can only hope things progress smoothly from here.
1 Like
Iād still suggest communicating with tenant at earliest opportunity to say that you have sympathy, and you have done everything possible to help the tenancy go ahead. However they need to explain reasons for late payment and most importantly to communicate properly with you in future as you and OR came v close to cancelling the whole deal.
Iād be asking them if they really do want to go ahead given their apparent struggles even to make initial monthās rent and deposit (which it seems was apparent before the bereavement), or whether a mutual surrender of the tenancy is in everyoneās best interest. If they wish to continue ask they set up a standing order to pay the rent. Get an inventory clerk to do checkin and photos of the place. Get RGI if you can.
Meanwhile consider whether a s21 is still the best option or get OR advice on whether there is any other option for ending early
Good luck!
1 Like
Personally, I would have backed out of this tenancy. I sincerely hope this is a glitch caused by the bereavement and not a sign of things to come.
1 Like
It would take a court to decide who was not pursuing the tenancy and therefore whether retention of the holding deposit was justified, but on the face of it, its a bit of both and my understanding is that under those circumstances the holding deposit should be returned to the applicant.
I donāt follow this. Letās assume that the applicant had not paid the deposit at the 11th hour as the OP described, they would have failed to pay the deposit as expected and did not communicate at all for two weeks at a critical stage in the application process. How is this not failing to take all reasonable steps to enter the agreement?
Iām just a bit puzzled and trying to understand your reasoning.
They dont want the tenancy. The priority is to relet it. I would immediately carry out more viewings.
The only question is how much money you get to keep. The de facto case is they havent moved ahead with the contract and you are happy to cancel it withholding Ā£x.
If you cant get a response then state your intention somehow and give a week for them to respond if not move ahead. Dont get legal unless you have to
there are a long list of why people say they cant move ahead and its all irrelevant
Please ignore my comments above in relation to the Tenant Fees Act as these are incorrect and my apologies for that. As David240 has pointed out, that Act is concerned with the conditions under which the deposit must be repaid for circumstances PRIOR to the deadline for agreement and this query relates to the period after the contract has been signed. The TFA does not therefore apply.
In this case I now believe that the only issue that applies is breach of contract. The applicant had paid a holding deposit and later the first months rent. What they hadnāt paid was the deposit. The deposit is not consideration for the contract and the tenant can argue that the landlord was therefore not legally justified in not starting the tenancy by withholding the keys on the start date. As such he has breached the contract and must return all monies paid.
There are almost certainly other factors that would need to be considered, such as whether the tenancy agreement makes the tenancy conditional on pre-payment of the deposit, but as said earlier, the arguments on both sides would need to be tested before a judge if the tenant had decided to sue.
This is all now academic of course and we hope this all works out well for Samuel33 and his tenant.
2 Likes
ah rightā¦ thatās the point I didnāt realise. Thanks for explaining.
iām not sure the deposit āisnāt a consideration for the contractā. The OR sample AST has a specific section (10.1 onwards) saying the tenant has paid a deposit of X and the LL has put in a protection scheme. So if tenant has signed this they have effectively promised to provide the deposit and at start date indicated for the tenancy they hadnāt done so, and prevented LL/OR from putting the deposit into a protection scheme (albeit there are 30 days allowed for thus when a deposit is received). Otherwise a tenant could not pay a deposit but accuse LL of breach for not putting deposit in a scheme etc.. which would clearly be wrong. Tenant has to take all reasonable steps to start tenancy on date specified in contract
I think this was likely a breach of contract by tenant as OR/LL i think make clear in advertising etc that deposit and 1st monthās rent are normally expected asap and before start of tenancy/before keys will be handed over.
@mod_harry can advise whether not providing a deposit in timescale agreed with OR/LL is a breach- even if it isnāt the tenant seems to have breached by providing false or misleading info to the LL on when amounts due would be paid
āI initially received steady communication and reassurance that the remaining amount would be paid shortly, deadlines slipped..ā
I dont think the deposit can be a consideration because its not a payment. It remains the tenants money, held in safekeeping.
If the contract is worded so that it is subject to the deposit being paid, then the contract may not be made until it is. I havent seen the OR AST agreement, but in any case, contract law can be quite complex and I dont know enough about it to even guess if this would be the case.