Holding Deposits

A holding deposit is a refundable payment made to reserve a rental property while the landlord or letting agent carries out referencing and other pre-tenancy checks.

Paying a holding deposit does not automatically create a tenancy. The application must still progress successfully and the tenancy agreement must normally be signed.

In England, the maximum holding deposit is the equivalent of one week's rent.

The limit applies to the tenancy as a whole, not separately to each applicant. Where several tenants are applying together, they should not each be charged one week's rent.

Where the rent is advertised monthly, one week's rent can generally be estimated by multiplying the monthly rent by 12 and dividing the result by 52.

Before transferring money, confirm who is receiving the payment, why it is being requested and what happens if the tenancy does not proceed.

You should also review the main tenancy terms and make sure the property, rent, move-in date and application requirements are suitable.

The standard deadline is normally 15 calendar days from the date the holding deposit is received.

The landlord or agent and tenant may agree to a longer or shorter period, but that agreement should be recorded in writing.

During this period, the applicant should respond promptly to reasonable requests for documents and information.

After the holding deposit is paid, the landlord or agent may begin identity, affordability, employment, rental-history and Right to Rent checks.

Applicants should provide complete and accurate information. Delays or missing documents may prevent the tenancy from progressing within the agreed deadline.

The holding deposit should generally be refunded when the landlord decides not to proceed, when the tenancy agreement is signed or when the agreed deadline passes without a tenancy being completed through no qualifying fault of the applicant.

With the tenant's agreement, the payment may instead be applied towards the first rent payment or the tenancy deposit after the tenancy agreement has been signed.

A landlord or letting agent may be able to retain the holding deposit in limited circumstances.

The reason should be connected to the applicant's conduct and must comply with the applicable legal requirements.

Where the landlord or agent decides to retain the holding deposit, the applicant should be told the reason in writing within the applicable timeframe.

The explanation should identify what happened and why the legal conditions for retaining the payment are believed to have been met.

Tenants should keep this explanation together with the property advert, application form, receipts and correspondence.

Where the holding deposit must be returned, it should generally be refunded within seven days of the relevant decision or event.

The applicant should provide accurate repayment details and keep a written record of any refund request.

A holding deposit reserves the property during the application process. A tenancy deposit is security held during the tenancy against qualifying unpaid rent, damage or other permitted losses.

The two payments have different purposes and different legal requirements.

Where the landlord decides not to proceed with the tenancy, the holding deposit should generally be returned.

The applicant should ask for confirmation in writing and request the refund promptly if it has not already been arranged.

If you believe a holding deposit has been retained unlawfully, first ask the landlord or letting agent for a written explanation and repayment.

Keep all relevant evidence, including the property advert, payment receipt, application documents and messages.

Where the issue is not resolved, you may be able to contact the local authority or apply to the First-tier Tribunal. Independent housing or legal advice may also be appropriate.

Take extra care before paying money for a property you have not viewed or where the identity of the landlord or agent cannot be verified.

Pressure to transfer money immediately, unusual payment methods and inconsistent property information may be warning signs.

Dan & Shiv Realty aims to make the reservation and application process clear before a holding deposit is requested.

Applicants receive information about the property, payment, referencing process and next steps so they can make an informed decision.