Holding Deposit

Holding Deposit is a payment by a prospective tenant to reserve a property during referencing, capped at one week's rent under the Tenant Fees Act 2019. Only one holding deposit can be taken per property at a time, and it must be refunded or applied to rent/deposit within 15 days unless the tenant provides false information, fails Right to Rent checks, or withdraws from the tenancy.

Legal Limits

Under the Tenant Fees Act 2019:

• Maximum: 1 week's rent
• Only one holding deposit per property at a time
• Must be refunded or applied within 15 days (unless agreed otherwise)
• Cannot be required alongside an excessive tenancy deposit

When Holding Deposits Are Retained

Landlords/agents can keep the holding deposit if:

1. Tenant provides false information

• Affects referencing outcome
• Would have changed letting decision

2. Tenant fails Right to Rent checks

• Cannot legally rent in the UK
• Knew they would fail

3. Tenant withdraws

• Changes mind about property
• Takes another property

4. Deadline passes

• 15 days (or agreed period) expires
• Through tenant's fault

When Holding Deposits Must Be Returned

Must be refunded if:

• Landlord/agent withdraws
• References fail but not due to false info
• Agreement not reached for other reasons
• 15-day deadline passes through landlord/agent fault

Holding Deposit Process

1. Receive payment - Issue clear receipt
2. Provide deadline agreement - Specify 15-day or longer
3. Complete referencing - Within agreed timeframe
4. Outcome:
   • Proceed: Apply to first rent payment or deposit
   • Don't proceed: Refund or retain per rules above

For Letting Agents

Best practices for holding deposits:

• Use clear written agreements
• Specify what happens in each scenario
• Keep within 15-day deadline (or agree longer)
• Document reasons if retaining
• Apply to deposit/rent if proceeding
• Never hold multiple deposits per property