Yes, if a tenancy doesn't go ahead then the landlord may be able to claim the tenant's holding deposit.
Since the introduction of The Tenant Fees Act 2019, the default assumption is that a holding deposit should be returned to the tenant. However, the Act allows landlords to claim a tenant's holding deposit in four different situations.
Below we'll summarise the four situations, known as grounds, in which a landlord can make a claim on a tenant's holding deposit.
The tenant informs the landlord, before the deadline for agreement, that they are withdrawing their application
If a landlord wants to make a claim using this ground they must inform the tenant within seven days of the tenant withdrawing and not more than seven days after the deadline for agreement.
Note: a tenant can challenge a claim using this ground if they can demonstrate that the landlord has acted in such a way that it would be unreasonable to expect the tenant to enter into a tenancy agreement with the landlord.
The tenant does not take all reasonable steps to enter into the tenancy agreement by the deadline for agreement
Landlords who want to use this ground need to notify the tenant within seven days of the deadline for agreement passing. It is also a requirement that the landlords themselves have taken all reasonable steps to enter into the tenancy agreement in time.
Note: again, a tenant can challenge a claim using this ground if they can demonstrate that the landlord has acted in such a way that it would be unreasonable to expect the tenant to enter into a tenancy agreement with the landlord.
The tenant provides materially false or misleading information
If a landlord can prove that the tenant has provided information which turned out to be false, inaccurate, or misleading and that the discrepancy is significant enough to justify the landlord no longer accepting the application then they can claim the holding deposit.
Landlords don't need to prove that the tenant knowingly misled them in order to use this ground.
Tenants need to be notified that the landlord is intending to claim the holding deposit within seven days of the landlord making the decision and no later than seven days after the deadline for agreement.
The tenant does not have the right to rent in the UK (only applies to tenancies in England)
If a landlord is letting out a property in England they must check, by law, that all tenants over the age of 18 have the right to rent in the UK. Landlords risk a significant fine if they do not.
A landlord can claim a tenant's holding deposit if they are able to prove that a prospective tenant has failed a right to rent check or that the tenant is unable to provide evidence that they have the right to rent (provided that the landlord could not reasonably have been aware of this fact before the holding deposit was accepted).
Landlords must make a claim with seven days of discovering the tenant does not have the right to rent in the UK.
Information on this site is by way of general guidance only and may not apply in your particular circumstances. You should not act or refrain from acting upon information on this site without seeking independent legal advice.