The Property Ombudsman has ordered a letting agent to return a £403 holding deposit after failing to disclose that a tenancy was dependent on the landlord’s onward property purchase, highlighting the importance of material information disclosure in the rental sector.
The case involved prospective tenants Brian and Shanae, who viewed a property in March 2025 that was marketed as available from 1 May 2025. After viewing, they agreed to proceed on condition that the property was cleaned, redecorated and a hot tub removed.
The tenants paid a holding deposit of £403 in early April 2025 and successfully passed referencing checks. However, on 14 April, they were informed for the first time that the tenancy start date was dependent on the landlord completing an onward purchase, with a revised commencement date of 9 May proposed.
Withdrawal and dispute
The tenants withdrew from the application on 21 April, stating they had not been made aware the tenancy was dependent on an uncertain onward purchase. They also argued the holding deposit should be returned as a tenancy agreement had not been entered into within the statutory fifteen-day period and no written extension had been agreed.
The letting agent maintained the property had always been marketed as available from early May and that the tenants had not required a fixed start date. The agent also stated the proposed later start date resulted from the tenants’ own conditions for remedial works rather than the landlord’s onward purchase.
Implications for agents
The Ombudsman found the dependency on the landlord’s onward purchase was material information that should have been disclosed before the holding deposit was taken. As the agreed remedial works were known at the outset, the agent should have adjusted the proposed start date or clearly explained the potential delay.
The ruling comes as landlords continue to exit the rental market, with tenanted property auction sales rising 70% in recent months. The case also highlights ongoing challenges for letting agents navigating regulatory requirements, while buy-to-let landlords report an 84% profitability rate despite increasing compliance pressures.
The complaint was supported and an award of £403 was made to the tenants to reflect the service shortcomings identified. The case underscores the requirement for agents to disclose all material information affecting a tenancy before taking holding deposits, particularly where completion is dependent on third-party transactions.
