A holding deposit is money a prospective tenant pays to reserve a property while you run references and checks, and in England it is capped at one week's rent. The rules are in Schedule 2 to the Tenant Fees Act 2019 and have applied since 1 June 2019: a 15-day default deadline to sign, repayment within 7 days in most cases, and written reasons within 7 days if you keep it.
Gov.uk lists two payments you can ask for before the tenancy agreement is signed: a holding deposit and a tenancy deposit. Since 1 May 2026, rent cannot be taken until both sides have signed.
Holding deposit rules at a glance
| Rule | What the law requires | In force since |
|---|---|---|
| Cap | One week's rent: the annual rent divided by 52 | 1 June 2019 |
| How many | One holding deposit per property at a time | 1 June 2019 |
| Deadline for agreement | The 15th day counting the day you receive it, unless a different day is agreed in writing | 1 June 2019 |
| Repayment | Within 7 days, unless an exception applies | 1 June 2019 |
| Keeping it | Written reasons within 7 days | 1 June 2019 |
| Rent before signing | Not allowed; after signing, usually up to one month (or 28 days) before the start date | 1 May 2026 |
How much is a holding deposit?
The maximum holding deposit is one week's rent. Schedule 1 to the Act defines one week's rent as the annual rent payable immediately after the tenancy is granted, divided by 52. Anything above that is a prohibited payment.
The cap is per tenancy, not per tenant. Gov.uk's example: three sharers on one agreement at £240 a week pay £240 between them, not £240 each.
Worked example for a monthly rent of £1,250:
- Annual rent: £1,250 × 12 = £15,000.
- One week's rent: £15,000 ÷ 52 = £288.4615.
- Maximum holding deposit: £288.46 (round down; £288.50 would put 4p over the cap).
- Maximum tenancy deposit, as annual rent is below £50,000: 5 × £288.4615 = £1,442.3077, so take no more than £1,442.30.
- Maximum rent you can usually ask for after signing and before the start date: one month, £1,250.
The quick way to get the weekly figure from a monthly rent is to multiply by 12 and divide by 52. Dividing the monthly rent by four gives a higher figure (£312.50 here) and breaks the cap.
The deadline for agreement: 15 days unless agreed otherwise
The "deadline for agreement" is the 15th day of the period beginning with the day the landlord or agent receives the holding deposit. If you receive it on Monday 2 November 2026, that day counts as day one, and the deadline is Monday 16 November 2026.
You can agree a longer or shorter deadline with the tenant, but only in writing. Agree it before you take the money, so the date that governs repayment is clear to both sides.
Is a holding deposit refundable?
Yes, in most cases. You must repay it if:
- the landlord and tenant enter into the tenancy agreement
- the landlord decides, before the deadline, not to go ahead
- no tenancy agreement is signed by the deadline for agreement
Repayment is due within the period of 7 days beginning with the date of the tenancy agreement, the date the landlord decided not to proceed, or the deadline for agreement. If the tenancy agreement is signed on 10 November 2026, the 7 days run from 10 to 16 November.
Where the tenancy goes ahead, you do not have to hand the money back as a separate payment. With the tenant's consent, it can go towards the first payment of rent or towards the tenancy deposit. The statutory guidance says this can only happen once a tenancy agreement has been signed.
Continuing the example: if the £288.46 goes towards the first month's rent, the tenant pays a balance of £1,250 less £288.46, which is £961.54. If it goes towards the tenancy deposit, the balance is £1,442.30 less £288.46, which is £1,153.84. An amount moved into the tenancy deposit counts as received on the date of the tenancy agreement for deposit protection purposes, and gov.uk says deposits must be protected in an approved scheme within 30 days.
When you can keep a holding deposit
Schedule 2 lets the landlord or agent keep the deposit in four situations:
- Right to Rent: the landlord is barred from letting to the tenant under section 22 of the Immigration Act 2014, and neither the landlord nor the agent knew, or could reasonably have known, before accepting the deposit.
- False or misleading information: the tenant gave information that the landlord is reasonably entitled to take into account when deciding whether to let.
- Withdrawal: the tenant tells you, before the deadline, that they have decided not to go ahead.
- Not taking reasonable steps: the landlord and agent took all reasonable steps to sign by the deadline, and the tenant did not.
The statutory guidance for councils gives examples. Lying about income or employment, or failing to disclose a County Court Judgment when asked, can justify keeping the deposit, as can income shown much higher because of a typo, even if the tenant did not notice it. A misspelt name, employer or previous address, an undeclared address that does not affect creditworthiness, or a slight misjudgement of income that does not affect affordability cannot.
There is an override. Even if one of the last two situations applies, you must repay if, before the deadline, the landlord or agent required a prohibited payment, or behaved in a way that made it unreasonable to expect the tenant to sign.
Written reasons: the 7-day notice
If you believe one of those situations applies, you must give the person who paid a written notice explaining why you intend to keep the deposit. If you do not, you must repay it. The notice is due within 7 days beginning with the date the landlord decided not to go ahead or, where no agreement was reached, the deadline for agreement.
State which situation applies, the facts behind it and the dates. Sending it as soon as the reason is known is safer than counting down the days.
What changed on 1 May 2026
The Schedule 2 rules on holding deposits were not changed: the legislation.gov.uk text shows no amendments since 1 June 2019. What changed is the payments around them:
- the Tenant Fees Act now applies to assured periodic tenancies, the new standard private tenancy
- you must not ask for, encourage or accept rent before the tenancy agreement is signed, even if the tenant offers it
- after signing, you can usually ask for up to one month's rent, or 28 days' rent if rent is not paid monthly, before the tenancy starts
So never describe a pre-signing payment as "first month's rent". Take a holding deposit, and only apply it to rent once the agreement is signed and the tenant consents.
Because one week's rent is based on the rent in the tenancy, the rental bidding ban matters too: you cannot accept an offer above the advertised rent. Our guide to Renters' Rights Act lettings adverts covers what adverts must say, including the rule that agents advertising on sites such as Rightmove, Zoopla or Facebook must list their fees or link to them.
Penalties for getting it wrong
Councils can fine a landlord or agent for failing to repay a holding deposit within 7 days, for not giving written reasons, or for taking more than one week's rent. Gov.uk sets the first penalty at up to £5,000. A second breach within 5 years can lead to prosecution or a penalty of up to £30,000, and a prosecution is a banning order offence. The tenant can also apply to the First-tier Tribunal to get the money back.
Holding deposit checklist for agents
- Confirm the agreed rent and work out one week's rent as annual rent ÷ 52, rounded down.
- Check no other holding deposit is held on the property.
- Tell the tenant in writing the amount, the deadline date and when it can be kept; agree any change to the 15 days in writing.
- Start checks straight away and keep notes of the steps you take.
- Diary the deadline and the 7-day repayment or notice date.
- On signing, get written consent before applying the deposit to rent or the tenancy deposit, and protect any deposit within 30 days.
- If you keep it, send written reasons within 7 days.
This guide explains the rules as of 30 October 2026 and is not legal advice.