Letting agents ‘use holding deposit system to start rent bidding wars’
LETTING agents in London are taking advantage of desperate renters by abusing a deposit system meant to help them secure a home, a consumer watchdog warned today.
Holding deposits are meant to help people looking to rent a home make a downpayment for a property to be taken off the market while their references are checked.
Which? has said letting agents are taking the payments, which can be hundreds of pounds, from multiple people for the same property. The agents then start a bidding war.
Those who miss out on the property may then face a long wait to get their money back, hampering their ability to secure a different house or flat. In some situations they may not get the deposit back at all.
Alex Neill, managing director of home products and services for Which? said: “Navigating the London rental market is both stressful and expensive. For letting agents to be adding to that pres- sure by taking financial advantage of prospective tenants is totally unacceptable.”
Mark Hayward, the chief executive of the National Association of Estate Agents Propertymark, called for regulations to be brought in. He told the Standard: “Taking a multiple deposit is bad practice and just shouldn’t be done.”
It comes after the Government pledged to crack down on unfair fees on tenants, cap holding deposits for renters and take other measures to make the private rental market more affordable.
Kate Webb, head of polic y and research at housing and homelessness charity Shelter, said: “It’s positive to see the ban on letting fees confirmed in the Queen’s Speech, along with a new commitment to cap deposits. However, action also needs to be taken to ensure holding deposits are only equivalent to three days’ rent and are not taken out by agents for multiple tenants.”
A victim of unscrupulous letting agents, Adam French, 28, from Walthamstow, said he twice had £500 payments taken for properties thinking it would secure them, only to find other people had also paid deposits.
He said: “We had paid a holding deposit that didn’t do what it said on the tin — it didn’t “hold” the property for us at all. I was furious. The letting agent began pulling the strings and set about trying to play all parties off against each other in a bid to increase the rent offer, all the while holding £500 from each. At this point we walked away and demanded our deposit back. A return that inexplicably took five full working days to come back into our account.
“All the while we couldn’t move forward with any other flats we saw.”
In a bid to stop people falling victim to the practice, Which? is offering holding deposit advice on their website.
To see the advice visit which.co.uk/holdingdeposit