Hunters wins key ‘prohibited payments’ judgement over contested referencing deposit
Judge says agent involved correctly declined to return the deposit after the tenant refused to approve an Open Banking probe of his account for additional referencing checks.
A prospective tenant who wouldn’t let an agent use Open Banking to probe his bank account has lost his bid to get a holding deposit back.
Moses Awomolo paid a £230.76 deposit to Hunters Letting Agency on a property in Frobisher Road, Erith, and provided a good employment and landlord reference.
After producing three bank statements and three payslips, he was asked to consent to Open Banking so that the reference agency could access his full banking history. He refused, saying it was a “wholly unreasonable requirement”, so failed the referencing stage and lost his holding deposit.
Hunters Letting Agency told a First Tier Property Tribunal that it had warned Awomolo his deposit was non-refundable if he did not pass referencing. It added that reference agency FCC Paragon had found detrimental information which required it to carry out further checks. Awomolo had declined the option of proceeding with a guarantor.
Prohibited payment
The tribunal ruled that the holding deposit was not a ‘prohibited payment’. The judge said the agent – Anne Worssam – had acted reasonably in seeking further information from the would-be tenant and that there was no suggestion that the reference agency was anything other than a competent professional organisation trying to do its job.
He added: “Having then been told by them that further checks were needed as a result of detrimental information coming to light, it is hard to see on what basis it was reasonable for the applicant to expect her simply to ignore the advice from the reference agency.”
David Smith (pictured), property solicitor at JMW, tells The Negotiator that this is a positive decision. “Open Banking is increasingly being used by referencing firms and the tribunal has agreed that this is perfectly legitimate for agents,” he says. “It’s much faster than other methods, but not always OK as a first approach and agents should offer other options.”
Read more about referencing and open banking.
