I have paid a holding deposit for a tenancy but have just been advised that the landlord has accepted a higher offer. Can the agent do this?
Sadly yes. In fairness, you cant blame the agent. All offers must be submitted to a landlord and any offers are no more than an agreement to agree. Its no different from buying when buyers are gazzumped. The issue with lettings is that more often than not, properties are on the market with more than one agent. If you offer less than the asking price, then your risk increases.
An agents duty is always to his client and you can imagine what would happen if another offer was made and not put forward, the original offer did not proceed and the landlord later discovered that had lost the opportunity of another tenant. Nevertheless, your holding deposit must be returned to you in full as soon as possible.
Where another agent is involved, matters are clearly out of your agents hands. However, even where an agent through whom you have offered accepts a holding deposit and removes the property from the market on the landlords instructions, there is still a risk that any person who viewed the property before you later submits an offer. In this case, the agent is still obliged to submit the offer and has no mandate to do otherwise.
One other point - if the references have commenced, the cost of these may be deducted from the holding deposit provided this is explained on the Holding Deposit Receipt. You will of course be entitled to receive your reference and can use this for an alternative property provided this is acceptable to the landlord in question.