Your Guide to Holding Deposits

After weeks of trawling the internet and viewing a stream of ‘nearly-but-not-quite’ properties, you’ve finally found the one. But while it’s still on the market, someone else could snap it up before you get the chance to sign your tenancy agreement. This is where a holding deposit comes in handy.

What is a holding deposit? 

A holding deposit is a refundable payment that you make to a landlord or letting agency to reserve a property. It acts as a guarantee that you will take up the tenancy; in accepting the payment, the landlord is agreeing to take the property off the market while references are checked and the tenancy agreement is completed.

How much is a holding deposit?

Legally, a holding deposit shouldn’t be any more than one week’s rent for the property. A simple way of working out your weekly rent is to multiply your monthly rent by 12, then divide the result by 52. Properties are typically advertised by price per week, which means you don’t even need to do any maths in most cases.

pile of pound coins on a black surface

When do I need to pay my holding deposit?

You should pay your holding deposit before signing the tenancy agreement, but only once you’ve agreed the general terms of the let, including rent, rental period and move-in date. If the landlord wants to change these terms once the deposit is paid, you’re entitled to refuse.

What happens if I don’t pay my holding deposit on time? 

It’s worth being prompt with your payment: landlords will only take the property off the market once they’ve received the holding deposit. Another prospective tenant could beat you to it if you leave it too long to pay.

Who keeps my holding deposit?

Your landlord or agent can hold your deposit for up to 15 days while running any necessary referencing checks, unless another deadline is agreed in writing. If, at the end this period, the landlord hasn’t responded to your tenancy application, your holding deposit must be returned in full.

Will I get my holding deposit back?

If your tenancy goes ahead, the holding deposit will be deducted from the first month’s rent. So, while you don’t get it back in the form of cash, it won’t cost you anything extra in the long term.

You should also receive a full refund if the landlord pulls out of the agreement; it’s illegal for landlords to deduct any fees from the refunded total. You are also entitled to your holding deposit if you don’t pass tenant referencing and credit checks.

pink piggy bank stood on a pile of coins

When is a holding deposit non-refundable? 

A holding deposit shouldn’t be taken lightly; if you pull out of the rental, the landlord or agency gets to keep the fee as compensation for the time and money lost.You also forfeit your holding deposit if you provide false information or fail a right to rent check.

What should I be aware of while paying a holding deposit?

These days, renters have a wealth of options when it comes to renting, including using a letting agent or going through the landlord directly. Yet, there are still scams out there which you should be weary about.

Prospective tenants have lost thousands of pounds to scammers who list fake properties online and ask for holding deposits, only to vanish without trace once they’ve got your money.

A few tips on how to avoid scammers:

  • Never send a holding deposit before you’ve viewed the property.
  • Make sure the advert looks legitimate. If there are no pictures, or there is no UK telephone number listed, be wary. If the price looks too good to be true, it probably is.
  • Never pay your holding deposit in cash. A credit card offers the most protection.
  • Always get confirmation via email or text that you’ve paid the holding deposit.

Even if the property looks legit, it’s worth asking your landlord or agent to set the conditions attached to your holding deposit out in writing. If these are broken, you can claim a refund and safeguard yourself against any potential issues.

Comments 0


Tenancy deposit
Money shield
Local heroes
Approved code
Property ombudsman
Open banking
Mashroom is an appointed representative of Adelphi Insurance Brokers Ltd. Adelphi Insurance Brokers Ltd is authorised and regulated by the Financial Conduct Authority (FCA). Their Financial Services Register number is 594620, with permitted business activities being introducing, advising, arranging, dealing as agent, assisting in the administration and performance of general insurance contracts and credit broking in relation to insurance instalment facilities. You may check this on the Financial Services Register by visiting the FCA’s website, or by contacting the FCA on 0800 111 6768

Mashroom Mortgages is a trading name of Emash Ltd which is an appointed representative of Mortgage Advice Bureau Limited and Mortgage Advice Bureau (Derby) Limited which are authorised and regulated by the Financial Conduct Authority.
Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured upon it. A fee of up to 1% of the mortgage amount may be charged depending on individual circumstances. A typical fee is £495.
Emash Ltd. Registered Office: 21 Navigation Business Village Navigation Way, Ashton-On-Ribble, Preston, Lancashire, England, PR2 2YP. Registered in England Number: 11735831.