Holding Deposits
At a Glance
A holding deposit is a payment made to reserve a rental property while the landlord or letting agent carries out pre-tenancy checks.
In England, the law limits a holding deposit to no more than one week’s rent, and it must usually be refunded or put towards your tenancy deposit or first month’s rent.
What is a Holding Deposit?
A holding deposit is a refundable payment made before a tenancy agreement is signed. Its purpose is to reserve a property for you while the landlord or letting agent completes referencing, affordability checks and prepares the tenancy agreement.
Paying a holding deposit does not mean you’ve entered into a tenancy agreement, nor does it guarantee that one will be offered. It simply shows that both parties intend to proceed, subject to the necessary checks being completed.
How Much Can a Holding Deposit Be?
Under the Tenant Fees Act 2019, a landlord or letting agent in England cannot ask for more than one week’s rent as a holding deposit.
The maximum amount is calculated using the property’s annual rent divided by 52.
For example:
| Monthly Rent | Maximum Holding Deposit |
|---|---|
| £800 | £184.62 |
| £1,000 | £230.77 |
| £1,500 | £346.15 |
| £2,000 | £461.54 |
When Should Your Holding Deposit Be Returned?
In most cases, your holding deposit should be:
- returned to you in full,
- deducted from your first month’s rent, or
- put towards your tenancy deposit.
This will usually happen once the tenancy agreement has been signed.
Unless both parties agree otherwise in writing, the landlord or letting agent normally has 15 calendar days from receiving the holding deposit to enter into the tenancy agreement. This is known as the deadline for agreement.
When Can a Landlord Keep Your Holding Deposit?
A landlord or letting agent can only retain your holding deposit in limited circumstances set out in law.
These include where:
- you decide not to proceed with the tenancy,
- you provide false or misleading information that affects your suitability to rent,
- you fail a Right to Rent check (where applicable), or
- you fail to take all reasonable steps to enter into the tenancy before the agreed deadline.
Outside of these circumstances, your holding deposit should normally be returned.
What if the Landlord Changes Their Mind?
If the landlord or letting agent decides not to proceed with the tenancy for reasons that are not your fault, your holding deposit should normally be refunded in full.
This also applies if they fail to take the necessary steps to progress the tenancy before the agreed deadline without a valid legal reason.
Renters' Rights Act Update
The Renters’ Rights Act introduced significant changes to the private rented sector from May 2026, including the move to periodic tenancies and restrictions on rent in advance. However, holding deposits continue to be governed by the Tenant Fees Act, meaning the existing rules remain in place.
Landlords can still request a lawful holding deposit of up to one week’s rent, but they must continue to follow the strict rules on refunds, deadlines and the limited circumstances in which the money can be retained.
Key Takeaways
- A holding deposit reserves a property while pre-tenancy checks are completed.
- It cannot exceed one week's rent.
- It is separate from your tenancy deposit.
- It should normally be refunded or used towards your tenancy deposit or first month's rent.
- A landlord can only retain it in specific circumstances defined by law.
- The Renters' Rights Act has not changed the core legal rules governing holding deposits.
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