On October 12 2001 my wife and I made an application to The Letting Shop, Canterbury, Kent to rent a property at 8 Blenheim Avenue, Canterbury owned by one A Howland of White Gates, Bekesbourne Road, Near Bridge, Canterbury CT4 5AE, together with a payment of £879.25 consisting of £129.25 administration charge and £750 deposit. On the morning of October 16 my wife was in communication with Fiona at the Letting Shop who was informed that we might not wish to go ahead with making a tenancy agreement. Fiona gave my wife a day in which to inform her of our final decision. On the morning of October 17 we notified the Letting Shop that we did not wish to rent this property. We were informed that in accordance with the Tenant Application Form this deposit was not refundable.

Upon seeking advice on this matter from the Citizen's Advice Bureau in Herne Bay, Kent Trading Standards, the Office of Fair Trading and the Kent Law Clinic I was advised that the term relating to the non-refundable deposit might be unfair under English law.

In particular I refer to the OFT publication "Guidance on unfair terms in tenancy agreements" and specifically to the sections quoted below:

Page 18, Group 4, Paragraph 4.5 "Where cancellation is the fault of the tenant, the landlord is entitled to hold back from any refund of prepayments a reasonable sum to cover either the net costs or the net loss of profit resulting directly from the default."

Page 19, Group 5 "Schedule 2, paragraph 1 [of the Unfair Terms in Consumer Contracts Regulations 1999], states that terms may be unfair if they have the object or effect of: (e) requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation;"

Page 19, Group 5, Paragraph 5.1 "It is unfair to impose excessive sanctions for a breach of contract. A term is a penalty if it requires the tenant to pay more in compensation for a breach than a reasonable pre-estimate of the loss caused to the landlord. Under common law this type of term would normally be void as a penalty."

I notified The Letting Shop of this and received cheques of £59.57 and £291.78 as part refund of the deposit paid, which I have cashed after notifying the Letting Shop that I would do so without prejudice to any claim against it or Howland. These cheques meant that I was still being charged a total of £527.90 for the property having been held for a period of 6 days which in my opinion appears punitive in the extreme. I was notified by the Letting Shop in Jan 2002 that a further cheque of £98.65 would be forwarded to me directly by the defendant, but no such cheque was ever received.

I was perfectly willing to compensate Howland and/or The Letting Shop for any administration costs incurred in processing my application and for any loss of profit relating to the period the property was held on my behalf. Based upon Page 18, Group 4, Paragraph 4.5 of the OFT publication "Guidance on unfair terms in tenancy agreements" I calculated reasonable compensation as being: administration fee £129.25; compensation for loss of rental whilst property being held (6/31x£600) £116.12; total £245.37. I therefore estimated the amount of refund due to me to be £633.88.

My calculation of the refund due was described by the Kent Law Clinic as "more than reasonable".

I would additionally point out that we were strongly advised by The Letting Shop's agent who conducted the viewing to submit an application without delay as properties of that kind were being let very quickly.

Howland's position appeared to rest upon the interpretation of our application as being an absolute guarantee by ourselves that we would rent his property. I was unable to accept this for the following reasons:

As Howland's acceptance of my application did not bind him to let the property to me it was therefore unreasonable that submission of the application was taken as an obligation on my part to rent the property.

Agreement for a tenancy to take place cannot be considered to have been reached until a tenancy agreement has been signed by both parties. As I had not even been shown a tenancy agreement, or even invited to inspect the form of one, at the stage I submitted my application it was therefore impossible for me to state at that time whether or not I would have been prepared to sign such an agreement (i.e. without studying it in detail).

In January 2001 my wife and I made application to The Letting Shop to rent a property in Albert Street, Whitstable. Our application was accepted and the offer of a tenancy made verbally. Only a matter of a week or so before the tenancy was scheduled to begin we were notified that the existing occupant had decided not to move out on the agreed date. Were it not for the hospitality of my parents my family and I would have been left homeless. Upon querying this situation with The Letting Shop I was informed that it was not obliged to provide any assistance as any tenancy was "subject to contract". I could not accept that in the case of the property owner and/or agent tenancy is subject to contract but in the case of prospective tenant it is taken as being agreed at the time of an application being submitted.

Howland further claimed that a prospective tenant's viewing was cancelled during the period the property was being held on my behalf on the grounds that the property "had been let". It is my experience that until a formal tenancy agreement has been made that properties are generally advertised with a status such as "under offer", and as such I could not understand why the prospective tenant's contact details were not taken and why he/she was not contacted again following the withdrawal of my application (three working days after it was made). Furthermore, given that the property took from 17 October until 21 November to be let it was presumptive to say the least to assume that the prospective tenant would have rented the property.

On 26 March 2002 I sent a letter to Howland informing him that if payment of the outstanding amount was not received by April 9 I would issue a County Court claim against him. As no such payment was received I issued a County Court claim against Howland on April 11.

On April 20 I received a cheque from the Letting Shop for the full amount of my claim.

As a result of my unfortunate experience I would offer the following advice to would be tenants within the private sector: 1) do not sign any agreements nor make any payments to property agents and/or owners without being fully acquainted with the terms which you are being asked to accept; 2) in the event of your cancellation of any agreement you should thoroughly investigate what compensation you might legally bound to pay, and in the event that more is being demanded to pursue the matter as fully and far as possible.