Holding Deposit Guidance

Holding Deposit Guidance

This document provides guidance on holding deposits taken from 1st June 2019.

You’ll find an example deposit request email template at the bottom of this page.

Do I need to take a holding deposit?

We strongly recommend that you always take a holding deposit to ensure that your prospective tenant is serious about your property. With the new tenant fees ban, if no holding deposit is paid, the tenant is not financially committed to your property in any way. In certain circumstances (see below), you can keep the holding deposit.

How much can I take?

You can take a holding deposit of up to one week’s rent. To calculate this, you multiply the monthly rent by 12 (months in the year) and divide by 52 (weeks in the year). Always round pence down, not up. eg, £1000 pcm = £1000 x 12 / 52 = £230

Can I take holding deposits from more than one applicant?

No, only one holding deposit can be held for a property at any one time.

How does the holding deposit work?

You should ask the tenant to pay the holding deposit as soon as possible but must bear in mind that you can only hold it for a limited time.

The ‘deadline for agreement’ is 15 days after you receive the holding deposit. You must enter in to a tenancy agreement with the tenant before the deadline for agreement, i.e. you must sign the tenancy agreement within 14 days of receiving the holding deposit. You can agree to extend/reduce the deadline for agreement with the tenant, but you must have it in writing.

We recommend that you delay taking the holding deposit until we have confirmed that your prospective tenants have completed their application forms. You can only keep the holding deposit for a limited time, so it’s important that everything is ready for the clock to start on those 15 days.

You must provide your tenant with details of why the holding deposit will and will not be refunded. We will provide the tenant full details of what the reference check entails. All applicants will have ample opportunity to declare any pertinent information.

When does the holding deposit need to be refunded?

You must refund a tenant’s holding deposit in full within 7 days of:

  • signing a tenancy agreement with the tenant (unless the tenant has agreed in writing for you to use their holding deposit towards their rent or deposit);
  • you choosing to withdraw from the proposed agreement; or
  • the deadline for agreement passing without a tenancy agreement having been signed (unless you’ve both agreed to extend it).

When can I keep a holding deposit?

A holding deposit can be retained if the tenant:

  • provides false or misleading information;
  • fails a right to rent check;
  • withdraws from the property (unless the landlord has acted in such a way that the tenant couldn’t reasonably be expected to wish to proceed with the tenancy); or
  • fails to take all reasonable steps to enter into a tenancy agreement.

What should I do if I have valid reason not to return a holding deposit?

If you have a valid reason not to continue with an applicant, you must let them know in writing that their holding deposit is not being refunded, and the reason(s) why. You must do this within 7 days of that decision, or the deadline for agreement, whichever is soonest. If no written notice is given to the tenant, the holding deposit must be refunded regardless.

To clarify, even if the tenant withdraws from the property, you must notify them in writing that their holding deposit is not being refunded because they have chosen to withdraw their application.

If you have valid reason not to return a holding deposit, you can still choose to refund some if you wish.

What should I do if I need to refund the holding deposit?

If a refund of the holding deposit is due to the tenants, this must be refunded within 7 days of the decision not to proceed.

What is the process for the holding deposit?

We recommend a time line as follows:

Once the offer has been accepted, we will send your prospective tenants application forms to complete.

Once we have received the completed application forms we will notify you; at this point you should request the holding deposit. Take note of the date received; you now have 14 days in which to sign a contract with the applicants.

You MUST notify us as soon as the holding deposit is received so that we can begin the reference checks. Reference checks will NOT start until you confirm that you have received the holding deposit.

Around day 7, if the tenant’s references are not yet complete (3-5 working days is the standard turn-around time for references. Some employers/landlords can take much longer to respond) and/or the contract has not yet been signed, you should request the applicant’s confirmation in writing that they agree to extend the deadline and for you to keep the holding deposit longer.

Day 15, if you have not signed a tenancy agreement with the applicants, have not agreed an extension to the deadline and have no valid reason to keep the holding deposit, you must refund the holding deposit in full to the applicants within 7 days.

At an appropriate time, and before the deadline/extended deadline date, we recommend that you ask the applicant for their written consent for you to keep the holding deposit until the tenancy start date, at which point it will be offset against either the first month’s rent or deposit. If they do not agree to this, you must return the holding deposit within 7 days of the deadline/extended deadline date.

If you have a signed contract in place, the tenant is legally bound to pay you the rent and deposit. That said, if they are not willing to allow you to keep the holding deposit, it may be wise to ask the tenant to pay the tenancy deposit instead (not to be confused with the holding deposit). The tenancy deposit must be protected within 30 days of receipt.


HOLDING DEPOSIT TEMPLATE – Simply replace the ***’s as appropriate, and cut & paste in to an email to your prospective tenant. If we are not providing your tenancy agreement, you should also provide the tenant with a copy of the tenancy agreement you will be asking them to sign.

Dear ***

I am pleased to hear that you have completed your referencing application forms.

Details of the proposed let are below.
Rent: £***
Deposit: £***
Proposed Tenancy Start Date: ***
Initial Lease Term: *** months

To proceed with your application, we need you to pay a 1 week holding deposit of £***.

Please make payment promptly to the account details given below:

Bank: ***
Sort code: ***
Account number: ***
Account name: ***

Please confirm when the transfer has been made, so that The Online Letting Agents can get your references underway as soon as possible.

Please note that any offer to rent the Property to you is subject to contract, receipt of satisfactory references and is at our discretion.

The Holding Deposit is not refundable if you:

  • provide false or misleading information;
  • fail a right to rent check;
  • withdraw from the property; or
  • fail to take all reasonable steps to enter into a tenancy agreement.

The Holding Deposit is refundable if:

  • we withdraw from the proposed agreement.

The Tenant Fees Ban 2019 stipulates that we must enter in to a tenancy agreement within 14 days of you paying the holding deposit. You can agree to extend this timeframe, and I may contact you in due course to that effect.

Once everything has been completed satisfactorily, we will contact you to confirm that you’re happy for us to keep the holding deposit, which will be offset against the first month’s rent.

Kind regards



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