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Topic - Tenancy deposit vs "service charge"

jonny taylor on 11 Dec 2012
I have got myself into a rather worrying situation with a flat I am interested in renting. I won't name the agency or city for now at least, but it's in Scotland which may well be relevant. This will probably all make me sound rather naive - I thought I was pretty cynical about letting agents but it seems I may have taken my eye off the ball. I am hoping the always-reliable UKC brain trust may be able to give me some useful advice.

This is a bit of a long one, but I would be really grateful to anybody who can offer any solid advice about what I should be doing about all this.

The story so far:
- Viewed flat today, liked it
- Rang agency to indicate interest, suggested I come down to office, woman said she could take my details over phone and confirm landlord's approval
- She phones back later to confirm it's ok and to take 250 holding deposit. As she is taking payment (debit card, damn...) she suddenly remembers that "this landlord does things differently" and that it is actually a "service charge".
- I start asking questions about this. e.g. does this go into DPS or equivalent. Apparently no it doesn't.
- I suggest this sounds illegal, she says it is fine and "our lawyers have confirmed its ok" (!!)
- She insists it serves as a deposit, and is returnable at the end of the tenancy assuming there is no damage etc.
- They have my money...

Now, the more I think about this the less I like it and the more I am annoyed at myself for not doing due diligence on the agency and landlord. Any of the above that has come from her may of course be lies. Other information I have:

- The agency is only acting as a finder, not ongoing management, the landlord will be responsible for the tenancy
- The landlord (or company?) apparently has a large number of properties in the city
- As far as I can tell from their website the agency may not be registered with any ombudsman or suchlike, only the "scottish association of landlords" which is not an ombudsman. I didn't even think to check that beforehand...
- I have not visited the agency's offices. Google street view shows a shopfront "to let" at that address, so at best they are a new outfit or have recently moved. They claim to be run by a guy who was a founding partner of another city agency that I believe is legit.
- Paranoia overload: when I arranged the viewing I also arranged to view another one on their books 3 doors down. When I viewed the first one the guy told me they hadn't been able to get the keys for the other so I couldn't see it. I have been amazed how often that has happened with other agencies when I have been viewing, but the ultra-paranoid part of me does wonder whether the other flat exists.

As a friend pointed out, isn't it illegal to charge fees associated with setting up a tenancy in Scotland? Rather suggests this may be sailing close to the wind legally speaking whether it is a deposit (not in DPS...) or a fee (illegal?)...
This quantity also looks and sounds suspiciously like it might even be the finders fee that the agent charges the landlord, which raises additional questions about me paying it and the odds that I will ever see it again.

Tomorrow I plan to contact the agency asking for
- Name of landlord and company
- Copy of contract in advance
- Written confirmation of arrangement re this "service charge"
Is there anything else I should be looking into?

I also plan to contact CAB & property ombudsman asking if they have any comments on the legality/dodginess of the arrangement.

Random thought: do distance selling/cooling off regulations apply to the money they have charged my card for this not-a-deposit, I wonder?

Basically I would like to take the place, but I am concerned that this is all very fishy and does not bode well for how the tenancy will go. I have dealt with ruthless agencies/landlords, but finding myself dealing with ones that might possibly be borderline illegal is an unfamiliar and unexpected experience. There is always the option to walk away and (probably? possibly?) lose my non-deposit if this all really does look like a Very Bad Idea.

If anyone can give any concrete advice on all the stuff above, that would be massively helpful right now as I am completely at a loss as to how to handle this. Thankyou...
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