[Ros & Jim]

When I owned a villa, and returned a guest's security deposit that had been paid via PayPal, the full amount was refunded as PayPal also refunded their fees. However, the refund had to be authorised within a certain timescale (think it was a month from the payment date but can't quite remember). This was from a business account.

If your deposit was paid in £s to the British owner, he would have passed this on to the new owner in dollars. Perhaps the fees were incurred when the new owner exchanged the deposit from dollars back into £s. However, if that's the case, I think he should not have deducted them from you but taken the hit himself.