The laws governing tenancy creation are complex and ever evolving, but OpenRent's tenancy creation process, Rent Now, is designed to ensure you are compliant by default - whilst still retaining the flexibility landlords and tenants require.
In order to use Rent Now there are certain processes we need to follow to keep both landlords and tenants legally protected - the payment of funds is a critical part of tenancy creation and doing so correctly is critical to make sure both landlords and tenants don't fall afoul of the law (eg. the Tenant Fees Act).
Firstly, if you have only accepted a holding deposit directly, then please refer to our article on holding deposits paid directly. Otherwise continue reading below and we'll guide you through the best next steps.
A) I've already accepted a holding deposit via Rent Now and am in the process
If you have collected rent or deposit money from the tenants the simplest thing to do is to return those funds to the tenant (as it's likely the tenant could claim these via a court before the tenancy has started anyway). If you are in Rent Now already, then your tenants will have placed a legally binding holding deposit providing commitment and security to the transaction.
As part of Rent Now, your tenants will be asked to pay funds when they are due, and these funds will be appropriately protected.
If you really don't want to return the funds to the tenant, the please contact us and state you'd like the bank transfer details for your specific tenancy. You can then pay these funds on behalf of the tenants to conclude the Rent Now process. We don't recommend this approach however, as it provides legal uncertainty over how funds were collected in the first place from the tenants, and whether tenants could claim those funds back - as we weren't party to that transfer, we can't provide legal certainty over the funds unlike within Rent Now. As such, we do recommend refunding the funds to the tenants who can very simply and quickly pay via Debit Card, Bank Transfer, or Open Banking the funds to OpenRent where funds are held in a client money account and protected.
B) I've not yet started the Rent Now tenancy creation process
Then the best approach is to ask the tenants to place a legally binding holding deposit via OpenRent. You can do this here: Invite tenant to place holding deposit.
You should also return any funds you have received to the tenants, it's likely the tenants would be able to claim these funds back anyway via the courts if the tenancy didn't go ahead, and this way you ensure your tenancy is set up correctly and in a legally compliant way - holding tenant money is non-trivial, and we don't advise landlords to attempt this themselves if they want to ensure they are protected against legal action from tenants themselves or tenant legal support services.
What should I do if a tenant has paid me deposit or rent money directly?
