Dear Lifehacker, We have paid a non-refundable deposit for some accommodation for 10 people for a weekend away in July. But now we need room for 18, which they can't accommodate, but they want to keep our deposit. Is this fair? Is this legal? Thanks, No Room At The Inn
It might not be fair, but it's not illegal either. As long as it was disclosed in the original contract, the property owner is perfectly within their rights to keep your deposit (provided the amount isn't excessive, which we will get to in a moment). This would have been spelled out in the terms and conditions you agreed to.
The reasoning here is that you denied them the opportunity to rent the place out to other customers. Your non-refundable deposit is therefore a form of compensation.
In reality, a replacement tenant is often secured after a cancellation, which essentially turns your deposit into a cash profit. This is never guaranteed, however - particularly in autumn when less people are organising weekend getaways. In other words, you might have genuinely caused them to lose money.
With that said, the deposit should not be excessive. As the NSW Fair Trading website explains:
The actual amount the trader is allowed to retain depends on the circumstances. This money compensates the trader for the time and expense devoted to the transaction, but should not be so high as to constitute a penalty.
According to the ACCC, a non-refundable deposit should be in the region of 10 per cent.
Generally, a fair deposit should not be more than 10 per cent of the total cost of the accommodation or service booked, unless your potential loss or inconvenience justifies a higher amount. Otherwise, such a higher amount may be seen as a pre-payment. Pre payments are refundable, minus any actual or reasonable costs you may have incurred before the booking was cancelled.
If you think the deposit amount is too high, politely explain the aforementioned consumer laws to the property owner via email (with relevant government links for your state or territory). If they still refuse to refund a portion of the deposit, you may need to contact your state's consumer affairs body about the dispute.
Alternatively, you could attempt to get the entire deposit refunded by being an unscrupulous scoundrel. One known tactic (that we personally don't recommend) is to adopt the role of a forlorn mourner. Your group just experienced an unexpected death in the family and are subsequently too devastated to go on holidays.
The property owner might still withhold your deposit but at least you'll be making them feel bad about it!
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