holding deposits
📖 What is holding deposits? Meaning and definition
A holding deposit is a sum of money paid by a potential tenant to secure a rental property. This payment indicates the tenant's serious intent to rent the property and typically takes it off the market for a short period while references and other checks are carried out. The Tenant Fees Act 2019 governs how holding deposits are handled in the UK, including rules about their maximum amount and when they must be refunded.
Under the Tenant Fees Act 2019, there are specific circumstances where a landlord or agent is not required to repay a holding deposit. For instance, if the prospective tenant provides false or adverse information, or fails to disclose relevant details, the deposit may be withheld. Conversely, if the landlord or agent fails to proceed with the tenancy without a valid reason, or if the deposit exceeds the legal limit, the tenant may be entitled to a full or partial refund.
Tenants can apply to the First-tier Tribunal (Property Chamber) for the recovery of a holding deposit if they believe it has been unlawfully withheld or if it constitutes a prohibited payment. The Tribunal will assess the application based on the provisions of the Tenant Fees Act 2019, considering factors such as whether the payment was prohibited, if adverse information was disclosed, or if the deposit amount exceeded the statutory limit. The Tribunal's decision will determine whether the landlord or agent must repay the deposit, in full or in part.
📋 Requirements
- Payment made by or on behalf of a prospective tenant to a landlord or agent.
- Payment is intended to reserve a property for a tenancy.
- The payment is subject to the provisions of the Tenant Fees Act 2019.
📝 Procedure
- Applicant (tenant) asserts payment of a holding deposit to the respondent (landlord/agent).
- Applicant seeks recovery of the holding deposit, often citing Section 15 of the Tenant Fees Act 2019.
- The Tribunal reviews the application, considering whether the payment was prohibited or if conditions for non-repayment (e.g., false information) apply.
- The Tribunal determines if the respondent is required to repay the holding deposit, in full or in part.
💡 Examples
- A tenant paid a £403 holding deposit but was denied a refund because they failed to disclose adverse information, as permitted by Schedule 2 of The Tenancy Fees Act 2019.
- A tenant successfully recovered a £300 holding deposit after a satisfactory reference was not obtained and the landlord refused repayment.
- A tenant was ordered to be repaid £323.00 for a holding deposit pursuant to paragraphs 3 and 3(c) of The Tenant Fees Act 2019.
- A tenant sought recovery of a holding deposit, part of which may have been a prohibited payment, from a landlord.
📚 Legal basis
- Tenant Fees Act 2019
❓ Frequently asked questions
What is the maximum amount a holding deposit can be in the UK?
The Tenant Fees Act 2019 limits holding deposits to no more than one week's rent for the property in question.
Can a landlord keep my holding deposit if I change my mind about renting?
The Act specifies conditions under which a landlord can withhold a holding deposit, such as if you withdraw from the tenancy, fail a right-to-rent check, or provide false information. Simply changing your mind might allow the landlord to keep it.
What if the landlord decides not to rent to me after I've paid a holding deposit?
If the landlord or agent decides not to proceed with the tenancy for reasons not related to your actions (e.g., you provided truthful information and passed checks), they are generally required to refund the holding deposit.
How do I get my holding deposit back if it's been unfairly withheld?
You can apply to the First-tier Tribunal (Property Chamber) for an order for the recovery of the holding deposit, as seen in several cases under Section 15 of the Tenant Fees Act 2019.
What kind of 'adverse information' might cause me to lose my holding deposit?
Based on case examples, 'adverse information' could include failing to disclose relevant facts or providing false information during the application process, which might affect the landlord's decision to grant a tenancy.