Cancelling a contract
Question
I've paid a deposit to an agent for a flat but haven't signed the contract yet. Since paying the deposit, I've split up with my partner and I've decided not to take the flat. When I asked the agent for a refund they told me I wasn't entitled to it. At no point did they tell me it was non-refundable. Is this legal?
Answer
As it's not clear if the deposit was a holding or tenancy deposit, both of these possibilities are explored below.
Agencies sometimes charge a holding deposit while they take up your references. If they do this, the amount should be deducted from any rent in advance or tenancy deposit you pay once any references they've requested come through.
If you don't move into the property you could lose the holding deposit. Usually, you would be asked to sign a contract with the letting agent; this would tell you whether this holding deposit is refundable.
As you weren't told the deposit was non-refundable you might feel the agency has treated you unfairly. If you do feel this way you can explore the possibility of claiming the money back in the County Court. Before taking any action you might find it helpful to seek more detailed advice from your local Citizens Advice Bureau (CAB) or from Shelter. However, if you don't have anything in writing, it could be difficult for you to prove what had been agreed between you and the letting agent.
If the money was intended to be a tenancy deposit, it belongs to you and should be returned to you once the tenancy has ended. The fact that you haven't signed the contract could mean that you're entitled to the money back. However, each case is different and will depend on specifics so it's worth going to your local CAB or Shelter to discuss the case in detail with an advisor.
There may be other options open to you to get your tenancy deposit back. These will depend on whether your landlord is using a tenancy deposit scheme or not. Any action taken for the return of a tenancy deposit must be taken against the landlord (and not the agency you're dealing with).
The law requires that deposits for assured shorthold tenancies entered into after April 6, 2007 must be paid into a scheme within 14 days of receipt. If they've entered into a scheme, your landlord or agency must provide you with certain information within 14 days of the day when you paid your deposit. This information includes:
- The landlord or agent's contact details;
- Which tenancy deposit scheme they are using and the contact details for the scheme;
- Information about the purpose of a tenancy deposit;
- How you can apply to get the deposit back at the end of the tenancy;
- What you can do if there is a dispute about the deposit.
The tenancy deposit protection scheme your landlord or agent has used will offer a free service to help resolve disputes. Information on what you need to do if there is a dispute will be contained in the information your landlord or agent should provide after taking your deposit.
Each scheme will contain an Alternative Dispute Resolution (ADR) service. When a dispute occurs, and if you and your landlord both agree to use the service, you will have to agree to accept its decision and will not be able to apply to the courts. If you or your landlord choose not to use the ADR service then the dispute will usually go to the County Court.
If the landlord hasn't put the deposit into a scheme, you could try to negotiate. Although negotiation isn't always guaranteed to work, it's definitely worth trying before you consider any further action.
If you can't convince the landlord to give your deposit back, the small claims court can settle the disagreement. The court will look at all the evidence and decide whether they should return your deposit. The court procedure is intended to be quite straightforward and simple enough to use without the assistance of a solicitor. You can find forms and guidance for the small claims process on the courts page of the Government website.
If you need to claim more than £5,000 (the limit for small claims), or you'd like further help with any aspect of this situation you can get confidential advice and information from Shelter, CAB or a local advice agency.
Updated: 06/09/2012
Question answered by Shelter
