What is a holding deposit? Rules, refunds and limits
By TenancyDesk · Sources checked
A holding deposit is money a tenant pays to reserve a rental property in England before the agreement is signed. It cannot be more than one week’s rent. The landlord has 15 days to reach an agreement unless another date is agreed in writing, and must refund it within 7 days unless one of four reasons for keeping it applies.
- Maximum amount
- One week’s rent, per tenancy
- Deadline for agreement
- 15 days from receipt, unless changed in writing
- Refund deadline
- Within 7 days
- Written reasons for keeping it
- Within 7 days, or it must be repaid
- Penalty for a breach
- Up to £5,000, then up to £30,000
What is a holding deposit?
A holding deposit is a payment a prospective tenant makes to a landlord or letting agent to reserve a property while references and checks are done. It is paid before the tenancy agreement is signed. It is not the tenancy deposit, which is the larger sum held against damage or unpaid rent during the tenancy.
The rules come from the Tenant Fees Act 2019, which bans most payments by tenants in England and lists the few that are permitted. A holding deposit is one of the permitted payments, but only within strict limits on its size, how long it can be held and what happens to it afterwards.
This guide covers England. The Tenant Fees Act does not set the rules for Scotland, Wales or Northern Ireland, which have their own laws on fees and deposits.
Sources: GOV.UK: fees you can charge as part of a tenancy · Legislation: Tenant Fees Act 2019, Schedule 1 (permitted payments)
How much can a holding deposit be?
The maximum holding deposit is one week’s rent. Schedule 1 to the Tenant Fees Act says that if the holding deposit exceeds one week’s rent, the excess is a prohibited payment, which means the landlord or agent has broken the law by taking it.
The cap is per tenancy, not per person. GOV.UK gives the example of three people who want to share a flat on one tenancy agreement: they pay one week’s rent in total between them, not one week each.
You can hold one holding deposit for a property at a time. The Act says a second holding deposit for the same housing is not a permitted payment if you have already taken one and have not yet repaid it or reached the point where you are entitled to keep it. Taking deposits from two competing applicants for the same property is therefore not allowed.
Sources: GOV.UK: fees you can charge as part of a tenancy · Legislation: Tenant Fees Act 2019, Schedule 1 (permitted payments)
The 15-day deadline for agreement
Once you take a holding deposit, a clock starts. The ‘deadline for agreement’ is the fifteenth day of the period beginning with the day you receive the deposit, so the day the money arrives counts as day one. By that date the tenancy agreement should be signed.
You and the tenant can agree a different deadline, longer or shorter, but the agreement must be in writing. If referencing is likely to take more than two weeks, agree the later date at the start and keep the email or signed note.
If the deadline passes with no agreement signed, the deposit normally has to go back, unless one of the reasons for keeping it applies. A slow referencing company or a landlord who has not got round to the paperwork is not one of those reasons.
Sources: Legislation: Tenant Fees Act 2019, Schedule 2 (treatment of holding deposit) · GOV.UK: fees you can charge as part of a tenancy
Holding deposit refund: when must it be repaid?
A holding deposit must be repaid within 7 days in three situations: the tenancy agreement is entered into, the landlord decides before the deadline not to go ahead, or the deadline for agreement passes without an agreement.
When the tenant signs, you do not have to hand the money back and take it again. With the tenant’s consent it can be put towards the first payment of rent or towards the tenancy deposit. GOV.UK puts it this way: you could refund the holding deposit by reducing the first month’s rent or reducing the tenancy deposit.
A holding deposit does not need to be protected in a deposit scheme while it is a holding deposit. GOV.UK says that once the person becomes a tenant and the money becomes part of the tenancy deposit, it must be protected. The usual 30-day rule then applies: see tenancy deposit protection.
| What happens | What the landlord or agent must do | Time limit |
|---|---|---|
| Tenancy agreement is signed | Repay it, or with the tenant’s consent put it towards the first rent or the tenancy deposit | 7 days |
| Landlord decides not to let to the applicant | Repay it in full | 7 days from the decision |
| Deadline passes with no agreement and none of the four reasons applies | Repay it in full | 7 days from the deadline |
| Applicant fails a right to rent check the landlord could not have known about | May keep it, with written reasons | Reasons within 7 days |
| Applicant gave false or misleading information that matters | May keep it, with written reasons | Reasons within 7 days |
| Applicant withdraws before the deadline | May keep it, with written reasons | Reasons within 7 days |
| Applicant does not take reasonable steps to agree the tenancy, and the landlord did | May keep it, with written reasons | Reasons within 7 days |
Sources: Legislation: Tenant Fees Act 2019, Schedule 2 (treatment of holding deposit) · GOV.UK: fees you can charge as part of a tenancy · GOV.UK: tenancy deposit protection
When can a landlord keep a holding deposit?
There are four reasons. GOV.UK lists them as: the tenant fails a right to rent check, withdraws from the application, does not respond or contact you to progress the tenancy, or gives false or misleading information that affects their suitability as a tenant.
The Act adds conditions to each. The right to rent reason applies only where the law stops you letting to the person and neither you nor your agent knew that before taking the deposit. The false information reason applies where the information reasonably affects your decision to let. The ‘not progressing’ reason applies only where the tenant failed to take all reasonable steps to enter the agreement and you, or your agent, did take them. See right to rent checks for how that check works.
Keeping the deposit also has a paperwork condition. You must tell the person in writing why you are keeping it, within 7 days of deciding not to let or of the deadline passing. If you do not, the Act requires the deposit to be repaid, and GOV.UK warns that you may receive a financial penalty.
Be fair about it. A tenant who fails referencing through no dishonesty, for example because their income is lower than you hoped, has not given false information. In that case the deposit goes back.
Sources: Legislation: Tenant Fees Act 2019, Schedule 2 (treatment of holding deposit) · GOV.UK: fees you can charge as part of a tenancy
How a holding deposit fits with the rent in advance rules
Since 1 May 2026 a landlord or agent cannot ask for, encourage or accept any rent before the tenancy agreement is signed. A holding deposit is treated differently: GOV.UK’s guidance for landlords confirms that before signing you can still ask for a holding deposit of up to one week’s rent, and for a tenancy deposit within the deposit cap.
After the agreement is signed and before the tenancy starts, you can ask for the first month’s rent, or up to 28 days’ rent where rent is paid more often than monthly. That is the point at which a holding deposit can be turned into part of the first rent payment, with the tenant’s consent. The rent in advance and rental bidding rules cover the limits in detail.
Do not use the holding deposit to get round the ban. A sum larger than one week’s rent, or a ‘reservation fee’ on top, taken before signing is either a prohibited payment or rent in advance. Councils can fine up to £5,000 for a first breach of the rent in advance rules and up to £30,000 for a repeat breach within five years.
Sources: GOV.UK: rent in advance and deposits · GOV.UK: asking for rent in advance, guidance for local authorities · GOV.UK: fees you can charge as part of a tenancy
Penalties for breaking the holding deposit rules
Taking too much, holding it too long or keeping it without a valid reason is a breach of the Tenant Fees Act. GOV.UK gives the maximum penalty as £5,000 for a first offence. A further breach can bring a penalty of up to £30,000 or prosecution with an unlimited fine, and a possible ban from managing property.
Tenants who think a holding deposit has been wrongly kept can complain to their local council. Good records usually settle the matter either way, so keep the receipt, the dates and every message about the application.
- Work out one week’s rent before you ask for anything, and never take more.
- Take one holding deposit per property, covering all the applicants on the tenancy together.
- Write down the date you received it and the deadline for agreement, 15 days on unless you both agree another date in writing.
- Tell the applicant in writing, before they pay, the four reasons the deposit could be kept.
- Do the right to rent check and referencing promptly, so any delay is not yours.
- If you keep the deposit, send written reasons within 7 days. If you are not keeping it, repay it within 7 days.
- When the agreement is signed, record whether the money was refunded, put towards the first rent or added to the tenancy deposit, with the tenant’s consent.
- Take no rent until the agreement is signed. The checklist for becoming a landlord shows where each payment fits.
Sources: GOV.UK: fees you can charge as part of a tenancy · Legislation: Tenant Fees Act 2019, Schedule 2 (treatment of holding deposit)
Common questions
How much is a holding deposit?
A holding deposit can be no more than one week’s rent for the whole tenancy, however many tenants there are. Under the Tenant Fees Act 2019 anything above one week’s rent is a prohibited payment. Three sharers on one agreement pay one week’s rent between them, not one week each.
How long can a landlord keep a holding deposit before the tenancy starts?
The standard period is 15 calendar days from the day the landlord or agent receives it. That date is the deadline for agreement. Landlord and tenant can agree a longer or shorter period in writing. After the deadline the deposit must be repaid within 7 days unless a valid reason for keeping it applies.
Do I get my holding deposit back if I change my mind?
Usually not. If the tenant withdraws before the deadline for agreement, the landlord or agent can keep the holding deposit, but must explain why in writing within 7 days. If they do not give written reasons in that time, the Tenant Fees Act requires the deposit to be repaid.
Do I get my holding deposit back if the landlord pulls out?
Yes. If the landlord decides not to let the property to you before the deadline for agreement, the holding deposit must be repaid in full within 7 days of that decision. The same applies if the 15-day deadline passes without an agreement and you did nothing to cause it.
Can a landlord keep a holding deposit if I fail referencing?
Only if you gave false or misleading information that reasonably affected the decision, or did not take reasonable steps to progress the tenancy. Failing a reference honestly, for example on affordability, is not on the list of reasons in the Tenant Fees Act, so the deposit should be repaid within 7 days.
Does a holding deposit have to be protected in a deposit scheme?
No, not while it is a holding deposit. GOV.UK says a landlord does not have to protect money paid to hold a property before an agreement is signed. Once you become a tenant and it becomes part of the tenancy deposit, it must be protected in an approved scheme within 30 days.
Is a holding deposit the same as rent in advance?
No. A holding deposit of up to one week’s rent can be taken before the agreement is signed. Rent cannot: since 1 May 2026 a landlord in England cannot ask for or accept rent before signing, and can then ask for no more than one month’s rent before the tenancy starts.
Official sources and scope
Checked on 5 October 2026. This is general information for private landlords in England, not legal advice or a complete compliance assessment. Follow the current official guidance for your tenancy and get advice about exceptions, missed deadlines or disputes.
- GOV.UK: fees you can charge as part of a tenancy
- Legislation: Tenant Fees Act 2019, Schedule 2 (treatment of holding deposit)
- Legislation: Tenant Fees Act 2019, Schedule 1 (permitted payments)
- GOV.UK: rent in advance and deposits
- GOV.UK: asking for rent in advance, guidance for local authorities
- GOV.UK: tenancy deposit protection
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