Holding deposit

A holding deposit is a payment a prospective tenant makes to reserve a rental property while the landlord carries out referencing and Right to Rent checks, before the tenancy agreement is signed. In England it is capped by law at no more than one week's rent and is a permitted payment under the Tenant Fees Act 2019. It is refundable in most circumstances, and a landlord may keep it in only four situations defined by that Act.

How much can a holding deposit be?

A holding deposit cannot exceed one week's rent, calculated as the annual rent divided by 52. For a property let at £1,200 a month, the annual rent is £14,400, so the maximum holding deposit is about £277. Charging more than one week's rent makes the excess a prohibited payment that must be refunded, and a landlord cannot hold deposits from several applicants for the same property at once. Once a holding deposit is accepted, the property comes off the market while the application is decided.

Is a holding deposit refundable?

A holding deposit is refundable in most cases, and it must be returned within seven days where the landlord decides not to proceed, where the tenancy agreement is entered into, or where the deadline for agreement passes for reasons within the landlord's control. The default deadline for agreement is 15 days from the day the landlord receives the deposit, unless both parties agree a different period in writing. A holding deposit does not need to be protected in a deposit scheme, because it is a short-term payment rather than security held across a tenancy.

When can a landlord keep a holding deposit?

The Tenant Fees Act 2019 allows a landlord to retain a holding deposit in only four situations: the tenant withdraws, the tenant fails a Right to Rent check, the tenant provides false or misleading information that is material to the letting decision, or the tenant fails to take reasonable steps to enter into the tenancy. In every case the landlord must give the tenant written reasons within seven days of the decision. From the lettings landlords run on August, the retentions that are later challenged are almost always the ones where no written reason was given, in which case the deposit must be refunded regardless of the underlying ground.

What happens to the holding deposit if the tenancy goes ahead?

Once the tenancy agreement is signed, the holding deposit is returned or, with the tenant's written consent, credited towards the first rent payment or the tenancy deposit. A holding deposit is not the same as a tenancy deposit, sometimes called a security deposit, which is the larger sum held throughout the tenancy as security against damage and unpaid rent. Since the Renters' Rights Act 2025 came into force on 1 May 2026, a landlord also cannot require more than one month's rent in advance or demand rent before the agreement is entered into, which fixes the order in which these payments fall.

Frequently asked questions

Do you get a holding deposit back if you fail referencing? 

It depends why. If you fail through no fault of your own, for example an employer confirms a lower salary than you honestly believed, the deposit must be refunded. If you fail because you gave false or misleading information, the landlord can keep it.

Is a holding deposit the same as a tenancy deposit? 

No. A holding deposit reserves the property before the tenancy and is capped at one week's rent. A tenancy deposit is security held during the tenancy, capped at five or six weeks' rent, and must be protected in a scheme. Our guide on the difference between a holding deposit and a tenancy deposit explains both in full.

Can a holding deposit be more than one week's rent? 

No. One week's rent is the legal maximum under the Tenant Fees Act 2019. Any amount above it is a prohibited payment the landlord must refund, and repeated breaches can attract financial penalties.