I found a tenant but unfortunately it has fallen thru due to a procedural issue.
I took the one week of Holding Deposit, and I have referenced them and when we reached the stage of signing the Tenancy Agreement yesterday, I sent them a Blank copy of the Agreement, so that they were fully aware what the agreement contains and no surprises.
I then asked them to pay the initial payment of the Balance of Deposit and one Months Rent, and on receipt of that I would sign the Tenancy Agreement with them.
However they refused to do this, and instead asked that i give them a signed Tenancy Agreement and only after they have this, then they will pay the balance of deposit and first months rent.
I was worried that once I have signed the Tenancy Agreement with them and given them the document, then that gives them the Legal Right to move into the property, even if they tell me that they can no longer pay any rent. Thats why I wanted the initial payment of balance of Deposit and first month rent before I signed the Tenancy agreement with them.
I spoke with the NRLA helpline today and was advised that before signing any Tenancy Agreement, I should always get the Full Deposit and one months rent, and told the Holding Deposit Agreement also states this that initial payment is due subject to the landlord agreeing to proceed. I also spoke with couple of estate agents, and they too said the same ie don't sign till you have the deposit and first month rent.
Anyhow after I said this to the prospective Tenant that NRLA helpline have advised this, the deal fell thru, and they were saying they are being advised the opposite i.e. don't pay balance of deposit and first month rent till the landlord has given you a signed tenancy agreement.
This is what they said to me:
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Taking a deposit and first months rent before the contract has been signed deems it a holding deposit of more than 1 weeks rent and is not legal in the UK.
I have just discussed this with above mentioned estate agents and they confirmed that under no circumstances should funds be sent without a contract in place. Anyone requesting funds before contract is likely fraudulent, nobody would expect you to pay for something and then put a contract in place. Whatever the NRLA have advised is incorrect and probably illegal, you must have not clearly explained that our issue is not about paying before we move in, but with paying before legal contracts are in place.
We were told to quote you this: ‘The act limits holding deposits to the value of a week’s rent and stipulates that unless tenants pull out after making an offer for a property without good reason, they must be refunded to the tenant.
To enforce this, the act prohibits any payment to be made prior to the signing of a tenancy agreement.
This, says ARLA, means agents can no longer require tenants to pay their tenancy deposit and rent before signing their contract, as is often the case, as this would then break the law.’
We are not prepared to pay a deposit and first month rent without a signed contract and have been clearly advised by both estate agents and landlords not to do so.
At this point I request that you kindle return the holding deposit.
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Anyhow in all this backward / forward, the deal fell thru this evening. :(
I've said what the Helpline person told me, but seeing it is being questioned, was he legally correct?
As tenant was still holding on to their viewpoint, I'm confused as to what is the "correct legal" path here. Are there any lawyers who can give proper legal advise here? Obviously I went with what I was told on the NRLA Helpline, and you can see their response and result.
Also if I did sign first without taking any Balance of Deposit and Rent, then what would happen if the tenant turns around and says I have a tenancy agreement, and so I have the right now to move in, but unfortunately I can no longer pay you, but I still have the right to move in as we have a tenancy in place.
This is not to blame NRLA advice line or anything, I just want to know for future what is the "legally correct due process" and if it is to sign first, then how to deal with the non payment.
Thank you
AB
