Tenants did not move in or pay rent but contracts signed

Good morning, I recently took a holding deposit, then full deposit for my property via Open Rent. We signed contracts and trying to be helpful I agreed to let the prospective tenants pay their rent just before the date they were moving in 31st May.
On the 30th May they text to say that they were not going to go ahead with the tenancy. They did not pay their rent.

If they had paid their rent would this come to me from Open Rent?
As I have a signed tenancy agreement in place could they forfeit their deposit in lieu of unpaid rent? What is the best way to go about this? Open Rent tell me I am only entitled to received 1 week’s worth of rent as recompense which does not seem fair as I will lose 1 months’s rent. Any help would be much appreciated. Open Rent are being vague here.

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A contract in law has three elements; offer, acceptance and consideration.

You have a signed contract ( offer and acceptance) and the deposit is the consideration ( the holding deposit is also consideration if assigned to rent or deposit ).

This is why legal counsel always advised don’t sign a contract until you have deposit and rent .

With a signed contract in place they can ask for a key (!)and you can’t actually rent to someone else unless there is a deed of surrender.
Register the full deposit as normal.
You can’t release it till end of AST unless there is a deed of surrender.

What were your terms for accepting a holding deposit? What was it assigned to ?
Deposit, rent or to be returned?
They pulled out they forfeit it unless you assigned it .

They are liable for the full AST.
Yes you will be able to take the deposit as full rent.
However ,write to the tenant.
Let them know that the contract is valid and a deed of surrender is required to nullify it.
Up until then, they pay rent until you find a new tenant.
My terms for a deed :-
I take a month’s rent ( you now have to readvertise and look for new tenants ( viewings cost time and money; estate agents charge a months rent plus vat !) and the tenant pays legal cost as part of my terms and conditions. I delegate this to my solicitor to prepare the deed and they pay him directly.

You need to write to the tenants to tell them they are liable for the full AST unless they sign a deed or you find a tenant to replace the contract . In fact I would make them liable until you find a new tenant.

You have a contract with these apllicants, but not a tenancy. The tenancy would only begin if/when they took possession of the property. You dont therefore require a deed of surrender, but you do need to agree to end the contract before you can re-let. You are entitled to compensation in the form of rent, potentially for the whole term of the tenancy, but you have to mitigate your losses. This means finding another tenant asap. You would then formally agree with their request to end the contract. You can apply to retain their security deposit and/or sue them using MCOL.

Shelters website states that the tenant is legally bound from the date the lease starts.

‘Ending your tenancy before you move in’

‘Tenancies agreed in advance are usually binding even if you don’t move in.’

David Smith has also advised the same.
Students sign contracts well in advance.
If they pull out ( failed exams etc) they are liable even if they have not taken occupation.

The lease commences as per the date on the contract.

In law if they ask for the keys later you are bound.

that is one sided ,later they can ask for the keys? Wow . They may have thought they have found a better place, it falls thru and then they say , I can move in now !!

That’s the problem
Tessa and David on webinars always advise to take rent and deposit before signing contracts.

We take the deposit but I do wait for loans to materialise before I take rent which can be a nuisance but they have to provide supporting evidence if there are delays

Yes, the contract is binding, but there is not yet a tenancy. My suggestion was pragmatic, because its difficult, (and inadvisable) to try to force a reluctant contract holder to take up a tenancy.

My understanding is that the only way its a tenancy before they move in is if the agreement is signed as a deed, which I dont think applies here.

In my experience it has to be nullified even with digital contract.

It’s not about forcing a tenancy upon someone. You can’t re rent that house with an open contract in place.
If both parties have signed and there is consideration it needs to be nullified for you as a landlord to move on without repercussion.

We live in a litigious climate with no idea of a stranger’s agenda.

Yes, as I said, the landlord would have to agree to the tenants implicit request to end the contract. A signed letter in response to the tenants signed request should do the trick unless there is an Openrent process to complete. These could include an agreement that the tenant will allow the landlord to keep the deposits as compensation.