How much you can be charged and when a holding deposit should be returned.
What is a holding deposit?
A holding deposit is a payment to a landlord or agent to reserve a property.
In most cases, you should get the money back if the landlord decides not to rent to you.
Only pay a holding deposit if you're serious about taking on the tenancy. The landlord or agent might keep the money if you decide not to go ahead.
Most other charges such as reference fees are banned from 1 June 2019.
How much you can be charged
From 1 June 2019, a holding deposit can’t be more than 1 week’s rent.
How to calculate:
Monthly rent x 12 ÷ 52 = maximum holding deposit
Ask the landlord or agent to refund any money you've paid above this limit.
You can report them to trading standards at the council if they refuse and claim back any excess by applying to a tribunal.
What should happen when you pay
The landlord or agent should stop advertising the property.
They are not allowed to take a holding deposit from more than one person for the same property at the same time.
Entering into a tenancy agreement
You have 15 days from when you pay a holding deposit to enter into a tenancy agreement. This is called the deadline for agreement.
You can agree a different deadline with the landlord or agent in writing.
If you enter into a tenancy agreement, the landlord can either:
return your holding deposit within 7 days of agreeing the contract
put it towards a tenancy deposit or the first rent payment with your permission
You could lose your holding deposit if you decide not to go ahead, or don't take reasonable steps to agree a tenancy by the deadline.
Once you've signed a tenancy agreement, this will usually be legally binding unless you can end the tenancy early The landlord might be able to keep the holding deposit as part of any agreement to release you from the contract.
If the landlord decides not to rent to you
You should normally get your holding deposit back within 7 days if either the:
landlord decides not to offer you a tenancy
deadline has passed but you took all reasonable steps to agree a tenancy by then
When the landlord can keep a holding deposit
The landlord or agent can only keep your holding deposit if you:
decide not to rent the property
misled the landlord or agent
The landlord can’t keep the money for any other reason.
For example, you should still get your holding deposit back if you fail a credit check, provided you told the truth about your situation.
The landlord must write to you within 7 days to explain why they are keeping the holding deposit. If they don't, they must return the holding deposit in full.
If you decide not to rent the property
Your landlord or agent can normally keep the holding deposit if you either:
decide not to go ahead with the tenancy
don't take the necessary steps to agree a tenancy by the deadline
You should still get your money back if you decide not to rent the property because the landlord has acted unreasonably. This could include if they significantly change the terms of the tenancy or ask you to pay a banned fee.
The landlord or agent can keep the money if you have misled them about something that affects whether they offer you a tenancy.
For example, if you said your income was a lot higher than it is.
How to get your holding deposit back
Write to the landlord or agent if they keep a holding deposit when they shouldn't do. Ask for your money back in full.
You can also complain to:
Trading standards can help you apply to a tribunal to get your money back and can fine the landlord or agent.
A redress scheme can investigate your complaint and tell the agent to apologise or compensate you.
Last updated: 26 August 2019