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MacGuffin

Non-refundable admin fee / Failed referencing

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Two friends and I are in the process of going through tenant referencing for a flat in London. We had to pay a supposedly non-refundable 'administration fee' in order to start the referencing, after the landlord accepted our offer.

The wording in the email from the agency was as follows: "for us to hold the property under offer subject to contract & referencing and cancel viewings booked in, I require the non-refundable administration fee of £546 inclusive of VAT for 3 Adult Tenants paid."

I then asked the agency by email: "Why is the holding deposit described as 'non refundable'? We are very reluctant to pay £500+ that will not be returned even if a tenancy is not offered by the landlord."

I received the following gibberish as the reply: "The referencing fee is not refundable(£546) because the landlord has accepted your offer is happy to go ahead with the tenancy as long as all applicants pass referencing and sign contracts, the only way to fail referencing is if the combined income is not verified to be over £90,000 p.a and all applicants landlord references come back as accepted or credit checks, also before we can proceed we will also need the what happens next signed by all parties Asap."

We went ahead with it anyway, paid the administration fee, and submitted our details for referencing. PROBLEM: The referencing agency (in reality, a part of the same group as the letting agency, as they always are) has now said that one of my two friends, because he is employed by a foreign company and is paid in euros into a foreign bank account, is 'impossible to reference' so they are marking him as FAIL. The letting agent says he will contact the landlord to explain, but I am not hopeful, as it seems like a real box-ticking exercise.

My question here is about the 'administration fee'. How can this be non-refundable when we were required to pay it before referencing would be started, but NOT told the criteria by which the referencing would pass or fail? If we had been told that all applicants must have a UK-based employer or at least a UK-based account, we would not have bothered.

My friend's situation is slightly out of the ordinary, but not really. This is London, for goodness sake. I know people who live Paris/work London and live London/work Dublin. In fact, my friend is rarely in London OR his headquarters, as he is 80% of the time on the road. This week Vienna, next week Shanghai! 

The three of us have shared a flat in London before and have provided excellent references from that landlord.

It's ironic because my foreign friend makes more than us other two put together and could easily afford the place by himself.

MY QUESTION: If we do get rejected for this reason, will it be a straightforward matter to get the 'non-refundable' admin fee back via the small claims court?

Edited by MacGuffin
typo

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The agents make more money every time they fail tenants. If your contract\appform says non refundable bye bye 546£. If it went to court I suspect they would have to show reason for rejecting the tenancy which they may or may not have.

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On 18/10/2017 at 1:11 AM, GreenDevil said:

 If it went to court I suspect they would have to show reason for rejecting the tenancy which they may or may not have.

They have stated the reason is that my friend is employed by a company outside the UK. I would say that is not a sufficient reason for rejecting a tenancy, and so our admin fee should be returned. What I am asking on the form is if anyone's sees any potential problems with presenting the case in this way. I am talking about taking it to small claims court, not pleading with the agency.

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11 minutes ago, MacGuffin said:

They have stated the reason is that my friend is employed by a company outside the UK. I would say that is not a sufficient reason for rejecting a tenancy, and so our admin fee should be returned. What I am asking on the form is if anyone's sees any potential problems with presenting the case in this way. I am talking about taking it to small claims court, not pleading with the agency.

By all means write a letter to the agent telling them you are going to SC on the grounds that is not a reasonable excuse. I would say thats fair. Give them 14 days. They may refund it. If they don't pay your 60:quid and get a court summons. They will prolly pay it then. Getting a solicitor costs ££ and is bad publicity. If you lose you're another 60 quid down. aFAIK they are unable to claims costs so you further loss is limited.

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15 minutes ago, GreenDevil said:

By all means write a letter to the agent telling them you are going to SC on the grounds that is not a reasonable excuse. I would say thats fair. Give them 14 days. They may refund it. If they don't pay your 60:quid and get a court summons. They will prolly pay it then. Getting a solicitor costs ££ and is bad publicity. If you lose you're another 60 quid down. aFAIK they are unable to claims costs so you further loss is limited.

Oh I know all that. I'm a veteran of small claims court. I always win. But I just wanted opinions on one specific point. The application was rejected on a criterion that wouldn't have been obvious to applicants before applying, nor was it stated anywhere. Yet we stand to lose our 'admin fee' because we failed to meet it. It seems to me a court will agree that, if the application fee is to be non-refundable, that the referencing criteria should be clear, not secret and arbitrary.

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I had a similar problem with a well known EA/LA company in London. The LL in my case just decided to go ahead and find their own tenant. The company tried to hang onto my money (which was a deposit they insisted on to "hold" the flat). We didn't get to the referencing stage.

What I did was write to them (registered letter) and then I visited after the 7 days and stayed in their office making a fuss until they paid me. They yelled and screamed at me.  This has happened repeatedly to me and sometimes it has taken a small claims threat to get the money back. I've not made it to the small claims court over referencing fees as yet.

My take on this is that the agent should have known of your circumstances and known that their choice of a referencing company would automatically fail one of you. If you were not warned of this or given the criteria upfront then they were negligent. 

Anyone can set themselves up as a letting agent. I saw one TV program on an agent in London which when interviewed about ripping off a tenant said that they "liked to use the court system to test claims". They were in the wrong, they knew that they were in the wrong but it doesn't matter as there is no real penalty apart from court fees if they lose. Even appearing on TV didn't put them off. 

 

 

 

Edited by Flopsy

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21 minutes ago, Flopsy said:

My take on this is that the agent should have known of your circumstances and known that their choice of a referencing company would automatically fail one of you. If you were not warned of this or given the criteria upfront then they were negligent. 

 

 

 

Thanks Flopsy. That's what I think as well. 

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it may be harder in London, but here in the NW it can be worth negotiating.

I had a conversation that went something like:

"Your £150 fee is a bit steep"

"We have half price offer on the fee for that property at the moment"

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  • 293 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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