Why it matters
What Holding Deposit means for a landlord
A holding deposit reserves a property while you reference an applicant, but the Tenant Fees Act caps it at one week’s rent and controls exactly when you can keep it. If the let does not go ahead for a reason that is not the applicant’s fault, the money must go back within seven days. Taking too much, or keeping it without a valid reason given in writing, is a prohibited payment that can lead to a £5,000 penalty.
Worked example
How it plays out
Omar pays a £300 holding deposit on 2 June for a flat in Bristol at £1,300 a month. One week’s rent is £300, so the amount is within the cap. The landlord and Omar have until 16 June to agree the tenancy. Referencing is delayed, and on 16 June the landlord decides not to go ahead for his own reasons. He must repay the £300 within seven days.
Common mistakes
Where landlords go wrong
- 01Taking more than one week’s rent.
- 02Keeping the money when the landlord, not the applicant, pulled out.
- 03Letting the 15-day deadline pass without agreeing an extension in writing.
- 04Keeping the deposit without telling the applicant in writing why.
What to do
A short checklist
- Calculate one week’s rent from the annual rent.
- Give the applicant the deadline for agreement in writing.
- Refund within seven days if the let does not go ahead, unless an exception applies.
- Put any reason for keeping it in writing.
Sources
Checked against these sources on 16 September 2026. A guide to the rules in England, not legal advice: for a dispute or a possession claim, speak to a solicitor.
