Holding deposits: ‘It seems landlords in Ireland can rip people off with impunity’

“It seems landlords in Ireland can rip people off, with impunity, because of some loophole in the law when you don’t have a signed lease in place yet,” starts a mail from a reader by the name of Suzanne.

“This means that a deposit handed over by a prospective tenant, that’s called a ‘holding deposit’, to show good intent to take the property, effectively immediately belongs to the landlord, no matter the outcome of the next steps between a landlord and a prospective tenant,” she continues.

She wanted to rent an apartment in Dublin city centre last September and she paid €1,185 in what she thought was a deposit that would be offset against the final deposit to be paid just before moving in.

“I paid the money in good faith, having not yet signed the lease, because he asked me to,” she says. “He seemed a nice guy. In fact, we emailed back and forth a couple of times to negotiate the rent as rents had softened and we agreed a new price.”

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So far so good.

Surely this is a massive rip-off of people who badly need that money and who realistically may not have the resources to take a legal case

“He had sent a lease but it had no mention of cats and I didn’t sign it as we changed the rental price. I needed to wait for him to send an updated lease. Then he sent it and I saw the ‘no cats’ clause. I told him we had cats and I offered to pay more deposit to cover any damage but he said pets were a hard no,” Suzanne writes.

She “tried and tried to get a way around it but I couldn’t turn my back on the cats and figured the deal was off. I apologised to him, turned down the place, and waited to hear back about the refund. Nothing for a week, then I emailed him and he sent a long email saying he was shocked that I would ask for it back as he had been out expenses for the ad on daft.ie, replacing (very old) beds (as we had asked to move in our own bed but we didn’t ask him to dump his beds”, she says. “If they were worth keeping, surely he would have put them in storage ... and in any case, a landlord’s expenses aren’t ours to pay, surely?”

He also pointed to “rent he’d lost out on because the back and forth and delay in start date”. The landlord also pointed out that “he’d lost future rent because it was now a bad time to rent out apartments (October versus September) and he might lose rent until next January. Anyway, he then said he was within his legal right to keep the ‘holding deposit’ and wouldn’t return any of it.”

Suzanne wonders what her next move is. “Take a case in the small claims court? What if the law says, forget it? I fear I may lose my €1,185. Surely this is a massive rip-off of people who badly need that money and who realistically may not have the resources to take a legal case.”

We don’t have much by way of good news for Suzanne.

According to Citizens Information, “some landlords or agents may ask you for a holding deposit when you decide to take the accommodation … holding deposits are often not refundable if you don’t take up the accommodation”.

The Residential Tenancies Board is responsible for regulating tenancy agreements, and arbitrates over landlord and tenant disputes. However, it does not have any role here or any jurisdiction over any payments made to landlords before a lease has been signed.

We also looked into practices across the industry and came across multiple examples of holding deposits being sought under the clear understanding that they would be offset against eventual deposits but would be non-refundable if the deal fell through.

The option of the Small Claims Court is there for our reader – it only costs €25 to lodge an application and there are no other legal fees to pay. However, we are not convinced such a case would be successful, meaning that in all likelihood, the money is gone.