Everything you need to know about holding deposits
What is a holding deposit?
The holding deposit is paid as soon as the tenant has agreed the offer, and it shows that the landlord that the tenant is serious about rent the property.
The holding deposit is equal to one week’s rent, and landlords aren’t allowed to ask for more than that. They also can’t subtract fees from it, and they can’t take more than one holding deposit at any particular time for a given property. In fact, as soon as an offer is agreed, we remove the property from Rightmove, Zoopla and OnTheMarket.
When the tenancy agreement is signed, the holding deposit is refunded, usually by putting it toward the first rental payment.
We strongly recommend that holding deposits are not paid in cash. Using our secure portal to pay and retain the holding deposit whilst references are being checked, means there is much less scope for fraud.
What happens if I pull out?
If the landlord pulls out, perhaps because the tenants have failed the reference checks or just because the landlord has changed his mind, then the holding deposit is returned to the tenant in full.
However, there are some limited circumstances in which the landlord is entitled to retain the holding deposit. This happens when the tenant withdraws or doesn’t take all reasonable steps to enter into the tenancy. Equally if the tenant provides misleading information which materially affects their suitability to rent the property, or they fail the right to rent checks, then the holding deposit is passed to the landlord.
Where does the holding deposit go?
As soon as the holding deposit is paid by the tenant, it is held in our client account. We hold it securely, until the rent is due or a refund is made. If no progress has been made with the tenancy with 15 days, the holding deposit will be refunded according to the guidelines above.
For more information, please see Schedule 2 of the Tenant Fees Act 2019.
We strongly recommend that landlords and tenants transact using our secure payment platform for the protection of both parties.