Holding deposits in 2026: what you can charge, keep and must repay
A holding deposit feels simple until a tenant pulls out, fails a check, or just goes quiet - and then landlords discover how strict the Tenant Fees Act 2019 actually is about the money. It is capped, time-limited, and if you get the amount, the deadline or the paperwork wrong, the whole payment can turn into a prohibited payment with a penalty attached. None of this changed when the Renters' Rights Act commenced on 1 May 2026. This guide sets out exactly what you can charge, when you're allowed to keep it, and what you must do if you don't.
What a holding deposit actually is
A holding deposit is a short-term payment a prospective tenant makes to reserve a property while you complete referencing - credit checks, employer or landlord references, and a Right to Rent check. It buys you some protection against a tenant who wastes your time and referencing costs, then walks away. It is not the same thing as the tenancy deposit (the 5-week security deposit protected once the tenancy starts) and it is not rent - it is a distinct, separately regulated payment with its own rules.
The one-week cap
The maximum holding deposit you can take is one week's rent, calculated from the agreed rent for the property. Take a penny more and you haven't just overcharged by that amount - the entire payment becomes a prohibited payment under the Tenant Fees Act. That exposes you to a civil penalty of up to £5,000 for a first breach, rising to up to £30,000 or a criminal prosecution for a repeat breach within five years. There is no grace for rounding up "to make it a neat figure" - work out the weekly rent precisely and charge exactly that.
The 15-day decision window
Once you've received a holding deposit, you have 15 calendar days to decide whether the tenancy is going ahead - unless you and the applicant agree a longer or shorter period in writing before the clock starts. In practice, 15 days is enough for most referencing to complete. If checks overrun and you haven't agreed an extension, the safe default is to return the deposit rather than sit on it past the deadline.
| Scenario | What it means for you |
|---|---|
| You charge more than one week's rent | The whole payment is a prohibited payment - repay it, and risk a penalty up to £5,000 (or £30,000 / prosecution if it happens again within 5 years) |
| The 15 days pass with no agreed extension | Return the deposit in full, even if referencing isn't finished |
| The applicant gives false or misleading information | You may keep some or all of the deposit |
| The applicant fails a Right to Rent check | You may keep some or all of the deposit |
| You decide to keep the deposit | You must tell the applicant why in writing within 7 days, or they can challenge you |
When you're allowed to keep it
You should return a holding deposit in full unless one of a short, fixed list of situations applies: the applicant gave you false or misleading information to try to secure the tenancy, they changed their mind and decided not to proceed, they failed to respond to reasonable requests for information, documents or action needed to complete referencing, or they failed a Right to Rent check. Outside of those four situations, the deposit goes back - "I found a better applicant" or "I just prefer someone else" are not valid reasons to keep it.
Returning it - and the 7-day rule
If you do return the deposit, it must go back within 7 days of your decision. With the applicant's agreement, you can instead put it towards their first month's rent or their tenancy deposit once the agreement is signed - a common, tidy way to handle it rather than repaying and re-collecting the same money days later. Get that agreement in writing so there's no dispute about what happened to the funds.
Don't hold two deposits on the same property
If you've already taken a holding deposit for a property from one applicant and haven't repaid it, taking a second holding deposit from a different applicant for the same property is itself a prohibited payment. If a second strong applicant appears while you're still within the 15-day window with the first, resolve the first holding deposit - repay it or confirm the tenancy - before taking money from anyone else for the same property.
Referencing cleared? Get the tenancy agreement ready
Once the holding deposit has done its job and your tenant is confirmed, our Tenancy Agreement Pack prepares the compliant assured periodic agreement from your answers - doubling as the written statement of terms, with the deposit prescribed-information cover letter, move-in checklist and reference and guarantor request letters included. £39, instant download.
Prepare my tenancy agreement →Frequently asked questions
What is a holding deposit and how much can I charge? A payment to reserve a property during referencing, capped at one week's rent - go over that and the whole payment becomes prohibited.
How long can I hold it before deciding? 15 calendar days from receipt, unless you and the applicant agree otherwise in writing.
When can I keep it? Only if the applicant gave false or misleading information, changed their mind, failed to respond to reasonable requests, or failed a Right to Rent check - and you must explain your reason in writing within 7 days.
Can I take one from two applicants for the same property? Not while an earlier one is still held and unrepaid - resolve or return the first before taking another.
This guide is general information for landlords in England, not legal advice for your specific circumstances. Rules can change - check GOV.UK before relying on any figure here.