Tenant Wins Holding Deposit Return Due to Technical Issues

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00BK/HTC/2022/0020 HMCTS code (paper, video, audio)

P: PAPERREMOTE Property : Studio 8, [ADDRESS], London [POSTCODE] Applicant : [redacted] : - Respondent : [redacted] : - Type of [NAME] : For recovery of all or part of a prohibited payment or holding deposit: Tenant Fees Act 2019 Tribunal member(s) : Judge D [NAME] : 10 [ADDRESS] [POSTCODE] Date of decision : 17th January 2023

DECISION

The tribunal’s summary decision (1) The tribunal determines that the respondent must repay the sum of £255.00 to the applicant in respect of the holding deposit retained by th (2) em. That amount to be repaid to the applicant within 28 days.

2 Background 1. On 02/03/2022 [APPELLANT] (“the applicant”) entered into a contract with the [COMPANY] (“the respondent”) for an assured shorthold tenancy of Studio 8, [ADDRESS], London [POSTCODE] (“the property”). The tenancy was to commence on 09/03/2022.

2. The tenancy agreement states the Rent to be:

“Rent £1105 nevertheless as hereinafter provided) for every Months (subject of the Term) Payable £1040 in advance by equal Monthly payments” (sic)

3. The applicant paid a holding deposit of £255 on 02/03/2022.

4. The respondent told the applicant that she could either pay six months’ rent in advance and a one-month deposit, or she could use the service of [NAME] at a cost to her of £269. She chose to use [NAME].

5. [NAME] required documents to be provided on their web platform, however the applicant experienced technical issues on their platform which meant that she could not upload certain documents until 10/03/2022. She had made attempts to comply with the requirements on 08/03/2022 and 09/03/2022.

6. On 10/03/2022 the issues were resolved and the applicant was able to upload the documents, however the start date of the tenancy had passed and the applicant tried to contact both [APPELLANT] and the respondent daily from that date until 12/03/2022 to try to agree a new start date. She did not want to be responsible to pay rent for days she had not been permitted the respondent to occupy the property.

7. On 11/03/2022 [NAME] responded to the applicant admitting their responsibility in the matter and offering to talk to the respondent on her behalf

8. The applicant made further attempts contact the respondent and [NAME] on 12/03/2022 and 14/03/2022. On 15/03/2022 the respondent offered to change the start date to 12/03/2022. They further rejected the applicant’s offer to start the tenancy on 15/03/2022 and refused to return the holding deposit.

9. An [NAME] dated 11/10/2022 was received by the tribunal and directions were issued on 17/11/2022.

3 The applicant’s case 10. In her [NAME], the applicant sets out details of her difficulties with [APPELLANT] and the technical issues that delayed the Guarantee being provided to the respondent.

11. She reports various attempts to contact both [RESPONDENT] and the respondent by telephone and email to try to resolve matters. She objects to having to pay rent for a property which she was not permitted to occupy because of technical difficulties not of her [NAME] and tried to negotiate a later start date with the respondent, who refused.

12. She asks that the holding deposit of £255 be returned to her because through no fault of her own, the start date of the tenancy had passed without her having been able to occupy.

13. On 25/04/2022 the applicant wrote to the respondent asking for the holding deposit to be returned. No response appears to have been sent explaining the reasons for its retention. The respondent’s case 14. The respondent has not complied with directions. No response has been received. However, the tribunal has the benefit of the documentation provided by the applicant.

15. The tenancy agreement itself is unclear in relation to the contracted rent. It states “Rent £1105 nevertheless as hereinafter provided) for every Months (subject of the Term) Payable £1040 in advance by equal Monthly payments” (sic).

16. The terms and conditions attached to the agreement state the rent to be £1,105 per month, with a £200 deposit. Whilst the terms remain silent on holding deposit, it provides confirmation “paid £255 (Payment on account is deducted from total amount but not refundable if you do not proceed)” indicating that this was indeed a holding deposit.

The tribunal’s decision and reasons 17. The tribunal finds that the sum of £255 paid by the applicant to the respondent was a holding deposit.

18. The contract was frustrated by the delay caused by [APPELLANT] or the respondent [NAME] it impossible for the applicant to move into the property on 09/03/2022.

19. The applicant attempted to negotiate with the respondent for a new tenancy start date to 15/03/2022 to avoid her paying rent for days on

4 which she was not permitted by the respondent to occupy the property. The respondent refused.

20. By paragraph 3(c) of schedule 2 of the Tenant Fees Act 2019, the landlord and the tenant failed to enter the agreement due to the failures of the respondent and/or [NAME]. Accordingly, the holding deposit must be repaid (paragraphs 4 and 5).

21. The tribunal finds that the applicant is entitled to the return of the holding deposit in the sum of £255 to be repaid within 28 days.

Name: Judge D [NAME]: 17th January 2023

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

Tenant Fees Act 2019 15Recovery 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— (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.

6 (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.

Schedule 1 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.

7 Schedule 2 Requirement to repay holding deposit 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 (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. 5(1)The person who received the holding deposit must repay it if— (a)that person believes that any of paragraphs 8 to 12 applies in relation to the deposit, but (b)that person does not give the person who paid the deposit a notice in writing within the [NAME] period explaining why the person who received it intends not to repay it. (2)In sub-paragraph (1) “the [NAME] period” means— (a)where the landlord decides not to enter into a tenancy agreement before the deadline for agreement, the period of 7 days beginning with the date on which the landlord decides not to do so; (b)where the landlord and tenant fail to enter into a tenancy agreement before the deadline for agreement, the period of 7 days beginning with the deadline for agreement.

Exceptions 6Paragraph 3(a) does not apply if or to the extent that the amount of the deposit is applied, with the consent of the person by whom it was paid— (a)towards the first payment of rent under the tenancy, or (b)towards the payment of the tenancy deposit in respect of the tenancy. 7If all or part of the amount of the deposit is applied in accordance with paragraph 6(b), the amount applied is treated for the purposes of section 213 of the Housing Act 2004 (requirements in

8 connection with deposits) as having been received by the landlord on the date of the tenancy agreement. 8Paragraph 3(b) or (c) does not apply if— (a)the landlord is prohibited by section 22 of the Immigration Act 2014 (persons disqualified by immigration status) from granting a tenancy of the housing to the tenant, (b)the landlord did not know, and could not reasonably have been expected to know, the prohibition applied before the deposit was accepted, and (c)if the landlord has instructed a [NAME] agent in relation to the proposed tenancy, the [NAME] agent did not know, and could not reasonably have been expected to know, the prohibition applied before the deposit was accepted. 9Paragraph 3(b) or (c) does not apply if the tenant provides false or misleading information to the landlord or [NAME] 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. 10Subject to paragraph 13, paragraph 3(c) does not apply if the tenant notifies the landlord or [NAME] agent before the deadline for agreement that the tenant has decided not to enter into a tenancy agreement. 11Subject to paragraph 13, paragraph 3(c) does not apply where the deposit is paid to the landlord if— (a)the landlord takes all reasonable steps to enter into a tenancy agreement before the deadline for agreement, and (b)if the landlord has instructed a [NAME] agent in relation to the proposed tenancy, the agent takes all reasonable steps to assist the landlord to enter into a tenancy agreement before that date, but (c)the tenant fails to take all reasonable steps to enter into a tenancy agreement before that date. 12Subject to paragraph 13, paragraph 3(c) does not apply where the deposit is paid to the [NAME] agent if— (a)the agent takes all reasonable steps to assist the landlord to enter into a tenancy agreement before the deadline for agreement, and (b)the landlord takes all reasonable steps to enter into a tenancy agreement before that date, but (c)the tenant fails to take all reasonable steps to enter into a tenancy agreement before that date.

9 13 Paragraph 10, 11 or 12 does not apply (so that paragraph 3(c) does apply) if, before the deadline for agreement— (a)the landlord or a [NAME] agent instructed by the landlord in relation to the proposed tenancy breaches section 1 or 2 by imposing a requirement under that section on the tenant or a person who is a [NAME] in relation to the tenant, or (b)the landlord or a [NAME] agent instructed by the landlord in relation to the proposed tenancy behaves towards the tenant, or a person who is a [NAME] in relation to the tenant, in such a way that it would be unreasonable to expect the tenant to enter into a tenancy agreement with the landlord.