Can I Take Charges from the Holding Deposit- when taking a holding deposit from a prospective tenant, do I charge them an admin fee on top for the cost of credit searches, reference checking etc., or should the landlord find this fee themselves?
Holding Deposits are a good way to secure the commitment of a prospective tenant to a letting whilst the formalities of credit checking, referencing and agreement processing are carried out.
It means you effectively suspend the letting from the market in favour of the prospective tenant.
Don’t take too high an amount otherwise if the applicant fails to progress the tenancy a confiscation of a large amount would be deemed unfair by a court of law.
A suggested amount would be £50 to £150 maximum which should cover expenses for suspension for a few days.
Landlords / agents can legitimately retain the deposit providing the tenant is aware that this will happen if they fail to progress.
Therefore landlords / agents should issue a Holding Deposit Agreement / Holding Deposit Receipt, agreed and signed by both parties, copies to be retained by each party.
The Holding Deposit Agreement should make it clear what the arrangements will be regarding Rent, any Administration Fee, any Damage Deposit / Bond to be taken, and any Tenancy Deposit Scheme to be used, as well as providing a receipt for the Holding Deposit taken.
Administration fees are optional. All agents take administration fees, but not all landlords do – the choice is yours.
©LandlordZONE All Rights Reserved – never rely totally on these standard answers. Before taking action or not, always do your own research and/or seek professional advice with the full facts of the case and all documents to hand.