First-tier Tribunal Orders Landlord to Return Holding Deposit

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference :

LON/00BH/HTC/2020/0010

HMCTS Code : P: Paper remote Property : 3 [ADDRESS] [POSTCODE] Applicant: [redacted] Respondent : [redacted] [COMPANY] of [NAME] :

For recovery of all or part of a prohibited payment or holding deposit: Tenant Fees Act 2019 Tribunal member :

Tribunal Judge I Mohabir

Date of determination : 12 May 2021 Date of decision :

12 May 2021

Amended under the Slip : 22 June 2021 Rule

DECISION

2 Covid-19 pandemic: description of hearing This has been a remote hearing on the papers, which has been consented to by the Applicant and not objected to by the Respondents. The form of remote hearing was P: PAPER REMOTE. A face-to-face hearing was not held because it was not practicable and no one requested the same. Introduction 1. This is an [NAME] for an order for the recovery of a holding deposit

paid in respect of a prospective tenancy of 3 [ADDRESS] [POSTCODE], pursuant to section 15 of the Tenant Fees Act 2019

(“the Act”).

2. The [NAME] form and supporting documents appear to confirm that on or about 23 September 2019 the Respondent received payment of £150 from the Applicant, but that, despite requests, the Respondent has not repaid that amount.

3. The payment appears to be a holding deposit within the meaning of the

Tenant Fees Act 2019. If so, the Tribunal would be empowered to order

recovery of all or part of that amount from the Respondent.

4. The issue to determine whether the Tribunal should make an order

under section 15 of the Act for the Respondent to pay all or any part of

the amount to the Applicant.

5. On 15 October 2020, the Tribunal issued directions to the parties. Only the Applicant has complied with the directions and the Respondent has not engaged at all in these proceedings.

6. Therefore, the [NAME] proceeds on the basis of the evidence filed by the Applicant.

[NAME]

7. This is set out in the Appendix annexed hereto.

Decision

8. The determination of the [NAME] took place on 12 May 2021 without an oral hearing. It was based solely on the [NAME] (as the Applicant’s statement of case) and other documentary evidence filed by the Applicant.

9. Under the terms of the Act, landlords and [NAME] must not require tenants (including prospective tenants and guarantors) to make any prohibited payments. In short a payment is a "prohibited payment" unless it is a permitted payment as listed in Schedule 1 of the Act below.

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10. A landlord may seek a holding deposit from a prospective tenant to reserve a property, however, such holding deposit must be repaid within 7 days of the landlord and tenant either:

(a) Entering into a tenancy agreement,

(b) The landlord decides not to enter into a tenancy agreement; or

(c) The landlord and tenant fail to enter into a tenancy agreement

by the deadline.

11. The Act provides that the deadline for the landlord and prospective

tenant to enter into a tenancy agreement is 15 days and where this does

not happen the landlord will have to repay the holding deposit to the

prospective tenant within 7 days. The Act does, however, permit a

landlord and prospective tenant to agree in writing a different deadline

rather than 15 days. 12. A landlord can only retain a tenant’s holding deposit if they provide

false or misleading information which reasonably affects the decision

to let the property to them, they fail a right to rent check, withdraw

from the proposed agreement or fail to take all reasonable steps to

enter an agreement when the landlord and/or agent has done so.

However, where a landlord or [NAME] agent seeks to retain a holding

deposit it must serve a notice on the payee of the deposit setting out the

grounds on which it intends to keep the deposit. Failure to serve the

requisite notice within the time limits prescribed (normally seven days)

will mean that the landlord or [NAME] agent will forfeit their right to

keep the same.

13. On the basis of the evidence provided by the Applicant, the Tribunal made the following findings:

(a) that the Applicant paid a holding deposit to the Respondent on

or about 23 September 2019 for the rental of the subject

property in the sum of £150.

(b) that the Respondent granted the Applicant a licence to

occupy/tenancy of the subject property on 25 September 2019

for an initial term from 28 September 2019 until 30 March

2020. The licence fee/rent was £750 and the Applicant also paid

a deposit of £750. It should be noted that although the

Respondent purported to grant the Applicant a licence

agreement, the Tribunal was satisfied that the agreement

contained all of the features of a tenancy agreement and that a

tenancy was in fact granted to him: see [NAME] v [NAME]

[1985] AC 809. Therefore, the holding deposit paid by the

Applicant was caught by the Act.

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(c) that the tenancy was entered into within 15 days of the payment

of the holding deposit being paid.

(d) that the holding deposit had not been applied to the rent or

deposit within the meaning of section 15(6)(a) and (b).

(e) that the Respondent has failed to repay the holding deposit of

£150 to the Applicant within 7 days or at all.

14. Therefore, the Tribunal was satisfied that the payment of £150 to the Respondent was a prohibited payment within the meaning of paragraph 3(3) in Schedule 1 to the Act.

15.

Accordingly, the Tribunal made an order under section 15 (9) of the Act for the Respondent to refund the payment of £150 to the Applicant not less than 14 days from service of this decision on it.

Name: Tribunal Judge I Mohabir Date: 12 May 2021 amended 22 June 2021

Rights of appeal By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written [NAME] for permission must be made to the First-tier Tribunal at the regional office, which has been dealing with the case. The [NAME] for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the [NAME]. If the [NAME] is not made within the 28-day time limit, such [NAME] must include a request for an extension of time and the reason for not complying with the 28-day time limit; the tribunal will then look at such reason(s) and decide whether to allow the [NAME] for permission to appeal to proceed, despite not being within the time limit. The [NAME] for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party [NAME] the [NAME] is seeking. If the tribunal refuses to grant permission to appeal, a further [NAME] for permission may be made to the Upper Tribunal (Lands Chamber).

5 Appendix of [NAME] legislation SCHEDULE 1 Permitted payments

Holding deposit 3(1) Subject to sub-paragraphs (3) to (6), a payment of a holding deposit is a permitted payment. (2) In this Act “holding deposit” means money which is paid by or on behalf of a tenant to a landlord or [NAME] agent before the grant of a tenancy with the intention that it should be dealt with by the landlord or [NAME] agent in accordance with Schedule 2 (treatment of holding deposit). (3) If the amount of the holding deposit exceeds one week’s rent, the amount of the excess is a prohibited payment. (4) In sub-paragraph (3) “one week’s rent” means the amount of the annual rent payable in respect of the tenancy immediately after its grant, renewal or continuance divided by 52. (5) A payment of a holding deposit is not a permitted payment if— (a) the landlord or [NAME] agent to whom the deposit was paid has previously received a holding deposit (“the earlier deposit”) in relation to the same housing, (b) the landlord or [NAME] agent has not repaid all or part of the earlier deposit, and (c) none of paragraphs 6 to 12 of Schedule 2 have applied so as to permit the landlord or [NAME] agent not to repay the earlier deposit or the part that has not been repaid. (6) The reference in sub-paragraph (5)(a) to a landlord or [NAME] agent receiving a holding deposit does not include the landlord or [NAME] agent doing so before the coming into force of Schedule 2.

15. Recovery by [NAME] of amount paid (1) Subsection (3) applies where— (a) a landlord or a [NAME] agent breaches section 1 or 2, as a result of which the landlord or [NAME] agent, or a third party, receives a prohibited payment from a [NAME], and (b) all or part of the prohibited payment has not been repaid to the [NAME]. (2) Subsection (3) also applies where— (a) a landlord or [NAME] agent breaches Schedule 2 in relation to a holding deposit paid by a [NAME], and (b) all or part of the holding deposit has not been repaid to the [NAME]. (3) The [NAME] may make an [NAME] to the First-tier Tribunal for the recovery from the landlord or [NAME] agent of—

6 (a) if none of the prohibited payment or holding deposit has been repaid to the [NAME], the amount of the prohibited payment or holding deposit; (b) if part of the prohibited payment or holding deposit has been repaid to the [NAME], the remaining part of the prohibited payment or holding deposit. (4) Subsection (5) applies where— (a) a landlord or [NAME] agent breaches section 1 or 2, as a result of which a [NAME] enters into a contract with a third party, and (b) the [NAME] has made a payment or payments under the contract. (5) The [NAME] may make an [NAME] to the First-tier Tribunal for the recovery from the landlord or [NAME] agent of the amount of the payment or (as the case may be) the aggregate amount of the payments that the [NAME] has made. (6) Subsection (3) does not apply in relation to a prohibited payment or holding deposit if or to the extent that, with the consent of the [NAME]— (a) the prohibited payment or holding deposit, or the remaining part of it, has been applied towards a payment of rent under the tenancy, or (b) the prohibited payment or holding deposit, or the remaining part of it, has been applied towards the tenancy deposit in respect of the tenancy. (7) Subsection (3) or (5) does not apply where an enforcement authority has commenced criminal proceedings against the landlord or the [NAME] agent for the same breach. (8) Subsection (3) or (5) does not apply where an enforcement authority has required the landlord or [NAME] agent to pay to the [NAME] all or part of the amount or (as the case may be) the aggregate amount referred to in that subsection. (9) On an [NAME] under subsection (3) or (5), the First-tier Tribunal may order the landlord or the [NAME] agent to pay all or any part of the amount or (as the case may be) the aggregate amount referred to in that subsection to the [NAME] within the period specified in the order. (10) A period specified under subsection (9) must be a period of at least 7 days but not more than 14 days beginning with the day after that on which the order is made. (11) An order of the First-tier Tribunal under this section is enforceable by order of the county court as if the amount payable under the order were payable under an order of that court.