Tenant Fees Act 2019 Does Not Apply to Common Law Tenancy Agreements

OUTCOME: Dismissed

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00AW/HTC/2025/0609 Property : [ADDRESS] [POSTCODE] Applicant : [redacted] Representative : I/P Respondent : [redacted]

Representative : [COMPANY] of [NAME] : For recovery of all or part of a prohibited payment or holding deposit: Tenant Fees Act 2019 Tribunal member : Judge Tagliavini Venue : 10 [ADDRESS] [POSTCODE] Date of decision : 8 October 2025

DECISION

2 Decisions of the tribunal (1) The tribunal declines to make an order for the return of the holding

deposit of £7,500 as it has no jurisdiction to do so in respect of this

Common Law Agreement. (2) The tribunal declines to make an order for the return of the £50 ‘test run’

payment as it has no jurisdiction to do so. _________________________________________________ The [NAME] 1. This is an [NAME] for an order for the recovery of a holding deposit

paid in respect of a tenancy of [ADDRESS]

[POSTCODE] pursuant to section 15 of the Tenant Fees Act 2019. The

claim seeks the return of a holding deposit of £7,500 including a sum

equivalent to 1 weeks rent of £3,750 and £50 in relation to a ‘test rent

payment’. The background 2. The [NAME] form and supporting documents appear to confirm that

in October 2024 the respondent received payment of £7,500.00 from or

on behalf of the applicant, but that, despite requests, the respondent has

not repaid this sum despite the applicant not being permitted to take up

occupation due to difficulties with transfer of the initial rent equivalent

to 6 months’ rent i.e. £97,000. In addition in October 2024 the applicant

paid £50.00 to the respondents as a test payment for their payment

system, the applicant seeks the recovery of this sum. A total of

£7,550.00 is therefore sought by the applicant. The hearing 3. Neither party requested a hearing and the [NAME] was determined

on the papers provided although neither party provided an indexed,

paginated bundle as directed in the tribunal’s Directions dated 1 August

2025. The applicant’s case 4. In the [NAME] form the applicant stated:

In October 2024, Mr [APPELLANT] (the "Applicant") negotiated a

conclusion of the Agreement for a Common Law Tenancy (the

"Agreement") of [ADDRESS], Knightsbridge SW1X

0LG, with the representative of [COMPANY] (the "Company"), Mr [NAME]. The Agreement

provided that the one week's rent shall be £3,750.

On 3 October 2024, Applicant received an Initial Payment

Request from the Company, and, on the same day, Applicant

paid an amount of £7,500 to the Company's bank account as the

Deposit (the "Holding Deposit"), an amount equivalent to two

weeks' rent, despite the permitted maximum was one week's rent

(£3,750).

Applicant received the Agreement only on 10 October 2024 and

initialized it on the same day. The Landlord never signed the

Agreement, nor did Applicant receive any letters from him once,

so we consider that the contractual relations of Common Law

Tenancy have never arisen between Applicant and the Landlord.

Hence, Tenant Fees Act 2019 applies, and the amount of £3,750

constitutes a prohibited payment according to Sch. 1 para. 3(3)

of the said Act.

Before coming to the UK, Applicant was a resident of Ukraine.

Still, the majority of his assets remained in Ukraine, namely in

bank accounts that are established in Ukrainian banks. On 24

February 2022, a National Bank of Ukraine Board Resolution

No. 18 was adopted, and para. 14 of the said Resolution has put

a restriction on SWIFT transactions from Ukrainian bank

accounts. These transactions are only allowed in specific

circumstances which do not include rental payments. Due to

these restrictions, it was only possible for Applicant to pay the

full amount he had to pay under the Agreement via the payment

link. [NAME]'s previous letting agent promptly provided

him with a payment link, so he had a reasonable expectation that

Company would be able to accommodate his needs, as

well, since it's usual practice for a money transfer.

Immediately after initializing the Agreement, on 10/10/2024,

the Applicant asked the Company to provide him with an

alternative payment method because it was impossible to

transfer funds via wire transfer for the above reasons. Mr

[NAME] initially responded that he had no credit card facility,

but Applicant suggested using [NAME] as a provider of

payment link. Then, on 11 October, Mr [NAME] reported his

bank could provide the payment facility. On 13 October, Mr

[NAME] promised to set up the facility "in a few days". Only on

24 October Mr [APPELLANT] provided Applicant with a payment link

set up in "[NAME]," but also asked Applicant to pay only £50 in

order to test the link. Applicant made such payment and these

funds were withdrawn from his bank account, but Mr [NAME]

claimed he needed another week or more to verify the transfer's

success. It was extremely unfeasible for Applicant to wait for

such a long time as he had to pay £500 per day for temporary

accommodation until the Agreement is concluded. Furthermore,

the deadline for the Agreement was on 25 October (by virtue of

Sch. 2 para. 2 of Tenant Fees Act 2019), so such actions on the

4

side of the Company could only be construed as

withdrawal from the process of entering into the Agreement.

On 24 October 2024, the last day before the deadline, the

Applicant made a final suggestion to proceed with

cryptocurrency, but the Company left this suggestion

unanswered.

Starting on 24 November 2024, the Applicant's representatives

conducted a communication with the Company on recovering

the Holding deposit. This communication lasted for several

months and eventually came to nothing. The Company claimed

that it was the Applicant who withdrew from the process,

ignoring the fact that he did everything that was within his

power to enter into the Agreement, and it was not eventually

concluded only the Company could not set up a payment link

within a reasonable deadline that is also set by the Tenant Fees

Act 2019. The Company has also claimed that the process was at

a financial cost, but it has never provided the Applicant with any

proof of expenses that were incurred by the Applicant's behavior.

… 5. The applicant provided an unsigned copy of the Common Law Tenancy

Agreement and evidence of the sums paid. The Tenancy Agreement

commencing on 12 October 2025 and was headed Common Law

Tenancy Agreement and made between the respondent (landlord) and

the applicant (tenant) with the tenant’s wife/partner and their two

children names as permitted occupiers. The weekly rent payable was

stated as £3,750 payable six monthly in advance equating to £195,000

per annum. A deposit of £22,500 was required from the applicant. By

clause 8.1. of the tenancy agreement, the rent was to be paid by bank

transfer to [RESPONDENT].

The respondent’s case 6. In correspondence the respondent asserted:

This is a Common Law Agreement, not an AST, so it is my

understanding that the Holding Deposit is not limited to one

weeks’ rent.

The attachment also includes the Tenancy Agreement signed by

Mr [NAME]. AML was completed on both parties

successfully via FCS Compliance.

The Holding Deposit was paid by bank transfer.

My Client (the Landlord) signed the Agreement and sent it to me

on 11th October 2024.

The Tenancy Agreement clearly states that the payment of rent

should be via bank transfer. [NAME] advised just before

start date that he would want to pay via a card payment – I

immediately advised that I did not have that facility, however I

5

was prepared to set the facility up for him. I kept him up to speed

constantly with progress. I finally managed to get this set up on

24th October 2024 and it was agreed we should carry out a ‘test

run’ with £50 before transferring such a large sum of £97,500

plus the remainder of the deposit. Mr [NAME] paid the £50

immediately and I confirmed receipt. The full payment could

then have been paid, however Mr [NAME] decided to

withdraw from the process….. 17 days after the term was

due to start.

The tribunal’s reasons 7. This is a high value tenancy made between two individuals for a rent of

£195,000 per annum. Consequently, the tribunal finds it can

properly be regarded as a Common Law Tenancy Agreement and not an

assured shorthold tenancy (AST) under the provisions of the Housing

Act 1988 (as amended). 8. The Tenant Fees Act 2019 does not have a specific section

exempting common law tenancies. However, in common law tenancies

it is the contractual terms that apply and not the protections provided

by other statutory provisions. 9. Consequently, the tribunal determines the protections provided by the

Tenant Fees Act 2019 do not apply to this contractual agreement. 10. However, were the provisions of the Tenant Fees Act 2019 to apply,

Schedule 2 of the 2019 Act states:

2(1)In this Schedule “the deadline for agreement” means the

fifteenth day of the period beginning with the day on which the

landlord or letting agent receives the holding deposit.

(2)But the landlord or the letting agent may agree with the

tenant in writing that a different day is to be the deadline for

agreement for the purposes of this Schedule.

3Subject as follows, the person who received the holding deposit

must repay it if—

(a)the landlord and the tenant enter into a tenancy agreement

relating to the housing,

(b)the landlord decides before the deadline for agreement not to

enter into a tenancy agreement relating to the housing, or

6

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

agreement relating to the housing before the deadline for

agreement.

4If paragraph 3 applies, the deposit must be repaid within the

period of 7 days beginning with—

(a)where paragraph 3(a) applies, the date of the tenancy

agreement,

(b)where paragraph 3(b) applies, the date on which the landlord

decides not to enter into the tenancy agreement, or

(c)where paragraph 3(c) applies, the deadline for agreement. 11. The tribunal finds the landlord and the tenant entered into a tenancy

agreement dated 11 October 2025 ie. within 15 days of the holding

deposit of £7,500 being paid on or about 3 October 2025. Subsequently,

the applicant was not permitted to take up occupation due to difficulties

with payment of rent by way of bank transfer. Consequently, the tribunal

finds that, an agreement having been entered into, the holding deposit

should have been repaid at the start of the tenancy i.e. 12 October 2025.

This has not been done. The respondent accepts the £50 trial sum paid

should be returned which the tribunal finds in any event, would be a

prohibited payment pursuant to s.3 of the Tenant Fees Act 2019, not

being a permitted payment under Schedule 1 of the Act. 12. In conclusion, the tribunal finds the provisions of the Tenant Fees Act

2019 do not apply to this contractual Common Law Tenancy Agreement

and dismisses the [NAME].

Name: Judge Tagliavini Date:

8 October 2025

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.

7 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 [NAME] which has been dealing with the case. The [NAME] for permission to appeal must arrive at the [NAME] 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).