Tenant Loses Holding Deposit Due to False Information

OUTCOME: Dismissed

1

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00AT/HTC/2024/0500 Property: : 5 TAUNTON AVENUE, HOUNSLOW, MIDDLESEX, [POSTCODE] Applicant: [redacted] [NAME]: : In Person Respondent: [redacted] : In Person Type of [NAME] : An [NAME] for the recovery of a holding deposit, pursuant to the provisions of section 15 of the Tenant Fees Act 2019 Tribunal Members: : JUDGE SHAW Mr A LEWICKI FRICS Date of Hearing: : 5th February 2025 Date of Decision : 26th February 2025

DECISION

2 Decision of the Tribunal

The tribunal determines that (i) the Applicant’s [NAME] for return of a holding deposit in the sum of £219 is dismissed

(ii) the tribunal makes no order as to costs

The [NAME]

1. This case involves an [NAME] by Mr [APPELLANT[NAME] ( “the applicant”) for return of holding deposit in respect of a potential tenancy of premises at 5 [ADDRESS] [POSTCODE] ( “the property”). The [NAME] is made pursuant to the provisions of the Tenant Fees Act 2019, and is brought against [RESPONDENT] (“the respondent”), who is the owner of the property. The respondent would have been the landlord, had the tenancy in fact been granted. In the event, no such tenancy was granted, and the parties are in dispute as to the circumstances in which the refusal of a tenancy came about, and whether the deposit is returnable under the provisions of the Tenant Fees Act 2019 (“the Act”).

The Hearing 2. Directions were given by the tribunal on 25 September 2024 and an oral hearing of the [NAME] took place before this tribunal on 5th February 2025. Both parties represented themselves in person, and supplemented written statements and other documents put before the tribunal, with oral submissions and evidence. It is proposed to summarise their respective cases, to review the legal provisions, and then to give the tribunal’s analysis and findings.

The Applicant’s Case 3. The Applicant’s case is set out in his [NAME] (which attached email or WhatsApp correspondence and the signed “Initial Holding Deposit Form”) and his “Reply to the Respondent’s Bundle for Determination” dated 19th November 2024. In essence it is that he met the Respondent and viewed the subject property on 26th July 2024. He was keen to reserve the property, because it met his requirements, but told the Respondent that he was likely to be rejected in the event of any credit testing, because he was unemployed and moreover had had a

3 County Court judgment recorded against him in respect of a missed mortgage payment (now settled) when he had been abroad. However, he told the Respondent that he would be ready to pay 6 months’ rent in advance, and that he had substantial savings. There was also discussion concerning provision of a suitable guarantor. In his [NAME], he records that the Respondent “convinced” him that if 6 months were paid “upfront” there “should not be an issue.” It was agreed that a Holding Deposit of one week’s rent in the sum of £219 would be paid, but in the full understanding on both sides that any tenant referencing process was likely to result in his rejection – but that the advance payment would either obviate the need for him to be approved, or negate that rejection, so as to make him acceptable to the Respondent as a potential tenant. The applicant asserts in his [NAME] (and repeated before the Tribunal) that at all times he has shown complete transparency with the Respondent.

4. Taking matters shortly, the applicant on this basis, paid the Holding Deposit, and was duly rejected by the tenant referencing agency, namely [NAME] [NAME]. He put forward a guarantor directly to the agency, who also proved unacceptable, but the applicant was then surprised to find that the Respondent, who had meanwhile taken the property off the market, declined to return his deposit. It is in these circumstances that he brings the [NAME]. The Respondent’s Case 5. The respondent gave a different account. That account is as contained in his own written statement, again as expanded upon orally before the tribunal. The applicant was referred to the respondent by [NAME], [APPELLANT], with whom the Respondent had placed the property for letting, and described to him (presumably on information supplied by the applicant) as “earning £70K”. A viewing through the [NAME] took place on 25th July. After the viewing the applicant returned to the property and obtained the respondent’s contact details from one of the other tenants (unchallenged by the applicant) at the property (which is an HMO). He then telephoned the respondent requesting to deal with the respondent directly.

6. A meeting at the property took place the next day, when the applicant told the respondent that in fact he was unemployed, but was confident he would soon find work, that he had £80,000 in savings, and that he was himself the landlord of 2 properties from which he was receiving rental income. He did tell the applicant that he had missed some mortgage payments whilst overseas but that these had now been rectified.

7. He informed the applicant that it would be necessary to proceed with standard tenant referencing, and that a non-refundable holding deposit of one week’s rent would be required, whereupon the applicant offered to pay a sum of 6months rent in advance. The applicant was told “the decision is yours” but that because of his circumstances a suitable guarantor would be essential. The respondent insists

4 that the applicant understood these terms and that the deposit was not refundable in the event that his [NAME] was declined by the tenant referencing agency.

8. Shortly after that meeting, which had started around 3pm, the respondent sent the applicant an email at 3.50pm, stating: “The holding fee will not be refundable if you withdraw your [NAME] or you fail to submit your documents for referencing within 7 days or Tenant Referencing finds you not to be suitable for whatever reason. Otherwise, once you pass the referencing the holding fee will go towards your first month’s rent.”

9. The respondent explained to the tribunal that the [NAME] is essential for his purposes, because without their satisfaction being obtained, he loses his rent insurance cover, which he was not prepared to forfeit.

10. The next day, the applicant, having received the email above, proceeded with the [NAME] and completed the Tenant [NAME]. Again, taking the matter shortly, the [NAME] when processed was unsuccessful. The applicant contacted [APPELLANT] [NAME], and supplied them directly with the details of his proposed guarantor. This guarantor again proved unacceptable. The respondent, having made the basis upon which he would proceed clear, and the applicant having accepted those terms, having ceased to market the property whilst the applicant’s [NAME] was being processed, declined to return the deposit. He told the tribunal that he is a member of the [NAME] ([COMPANY]) that he had followed their processes meticulously, but that the applicant had given false information to the referencing team when supplying his information, stating that he was employed when this was not the case, and giving false employers’ information. He had also been misleading in suggesting that he had a suitable guarantor, when this was clearly not the case. He (the applicant) took no other steps to substitute some other guarantor after his initial proposal was declined. He had been specifically advised by the respondent in their initial meeting that a guarantor would be essential in this case.

Applicant’s Reply 11. The applicant did reply to the respondent’s assertions both in writing (see his Reply dated 19th November 2024) and before the tribunal. In a series of rhetorical questions in the written document, the applicant re-asserts that he was transparent from the outset with the respondent, and asks why the applicant would have accepted the proposal of 6 months advance rent “which mitigated the reference

5 check failure, including guarantor question”. He regards as a “fundamental issue” the agreement to pay 6 months “upfront” which should be probative of the fact that the parties were not relying on the outcome of the tenant referencing. The Law 12. By paragraph 3 of Schedule 1 to the Act payment of a holding deposit is a permitted payment. Schedule 2 deals with the treatment of holding deposits including circumstances in which a holding deposit must be repaid. The Act sets out the circumstances in which it is lawful for a landlord to retain a holding deposit (see Schedule 2 to the Act). Those circumstances include (by paragraph 9 of Schedule 2): “…….. if the tenant provides false or misleading information to the landlord or letting agent and— (a) the landlord is reasonably entitled to take into account the difference between the information provided by the tenant and the correct information in deciding whether to grant a tenancy to the tenant, or (b) the landlord is reasonably entitled to take the tenant's action in providing false or misleading information into account in deciding whether to grant such a tenancy.”

Analysis and Reasons for Decision of the Tribunal 13. The Applicant identified the ground above as that relied upon as entitling the retention of the holding deposit. When asked to stipulate the matters relied on, he told the tribunal that first, the applicant had supplied thoroughly false information when completing the document for the [NAME] ([NAME]) engaged by the respondent. In answer to the question concerning whether the applicant was employed, the applicant responded (falsely) that he was indeed employed and gave details of a former employer. There is no issue that he was not at the time employed, and the former employer was no longer his employer.

14. Secondly, the applicant had provided the respondent with misleading information from the outset, in that, hearing of the applicant’s circumstances, the respondent informed him that a suitable guarantor would be essential in his case.

6 The applicant assured him, that he had just such a suitable guarantor. This transpired not to be the case at all. The tribunal asked the respondent what he would have done had he known that the applicant did not have a suitable guarantor at all, and his response was “That would have been the end of the conversation.” In other words the respondent would have spent no further time on this [NAME], and he would have left the property on the market, because from previous experience he would have known that it was a hopeless [NAME].

15. Asked about these 2 matters, the applicant did not seek to deny that he had falsely stated he was employed, nor that the alleged employers were no longer employing him. His only explanation seemed to be that no real harm was done by the falsehood because the agency, [NAME], was bound to discover the falsehood when checking the reference – and the company details given were indeed those of a company by which he had been previously employed.

16. This did not seem to the tribunal to be a compelling explanation. The fact that discovery of the untruth was inevitable, makes the explanation no more acceptable. One argument which might have been put forward, but was not, was that having earlier told the respondent that he was unemployed, this falsehood was of no consequence. However, the fact that the applicant was prepared to be untruthful in the [NAME], made it all the more likely that he would be regarded as unsuitable by the agency, thereby rendering the whole exercise a further waste of time for the respondent.

17. The applicant’s explanation in respect of the guarantor was equally unattractive. He told the tribunal that, at the time he gave his assurance to the responent that he indeed had a suitable guarantor, he genuinely believed this to be the case. Asked by the Tribunal when he had last spoken to this “suitable guarantor”, he told the tribunal that this had been about 6 months previously. After having given the assurance, he (the applicant) then contacted the friend who was to stand as guarantor, who told him that since they had last spoken his (the guarantor’s) circumstances had completely changed. He now had a young family and a series of commitments which would not recommend him as a guarantor. That

7 information was not at that time shared with the respondent – and indeed the applicant persisted in putting the friend’s particulars forward to the [NAME] agency as an appropriate guarantor. He was unsurprisingly rejected. Nonetheless, the applicant still asserted that he did in fact still have a guarantor, but that the guarantor had been deemed unsuitable by the agency.

18. Again, this seemed an untenable proposition to the tribunal. To have assured the respondent that he, the applicant, had someone suitable to act as guarantor, when in reality he had not spoken to this person for some 6 months, and had not checked the current financial circumstances and suitabilty of this person, seems to the tribunal to have been, at the very least, “misleading” for the purposes of the Act. This is all the more so, given that the respondent told the applicant at the outset, (as the tribunal accepts), that a guarantor was going to be “essential.”

Conclusion 19.

For the reasons set out above, the tribunal is satisfied that the criteria stipulated in paragraph 9 of Schedule 2 to the Act exist in this case, and that the respondent is not required to return the holding deposit in the sum of £219. The [NAME] is therfore dismissed, as is the request by the applicant for an award of £500 for mental and other distress, which as indicated in the tribunal’s Directions, the tribunal would have had no jurisdiction to award in any event. The applicant also applied at the hearing, in the event that his [NAME] is successful, for recoupment by the respondent of the [NAME] and hearing fees paid by him in bringing this [NAME]. The applicant has not been successfull and no such order is made.

JUDGE SHAW

26th FEBRUARY 2025

8 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 [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.