A holding deposit is the payment a prospective tenant makes to a landlord or letting agent to reserve a rental property while the formal application and referencing process is completed. It is one of the most commonly misunderstood elements of the London rental process — confused with the tenancy deposit, the first month’s rent, and the agent’s administration fee, all of which are different things with different rules.
Under the Tenant Fees Act 2019 — which remains the governing legislation for holding deposits in 2026 — the holding deposit is one of only a small number of payments that letting agents and landlords can legally request from tenants in England. Understanding what it is, what it secures, when it must be refunded, and when the landlord can retain it protects renters from incorrect charges and gives them confidence to act decisively in London’s fast-moving rental market.
What a Holding Deposit Is
A holding deposit is a payment that demonstrates the prospective tenant’s serious intention to rent the property. In exchange, the landlord or agent agrees to remove the property from the market and not offer it to other applicants while the referencing process is completed.
Once the holding deposit is paid:
- The property is taken off the rental market
- Other applicants are turned away or told the property is “let agreed”
- The landlord or agent begins formal referencing of the prospective tenant
- The tenant has a defined period (typically 15 days) to complete the process and sign the tenancy agreement
The holding deposit is not the tenancy deposit. The tenancy deposit (typically five weeks’ rent, held in a government-approved deposit protection scheme) is paid at the start of the tenancy and refunded at the end subject to any deductions for damage or unpaid rent. The holding deposit is a separate, smaller payment paid earlier in the process specifically to secure the property pending referencing.
The Legal Maximum: One Week’s Rent
The Tenant Fees Act 2019 caps the holding deposit at a maximum of one week’s rent. This is calculated by dividing the annual rent by 52.
For a property with monthly rent of £2,000 (£24,000 per year), the maximum legal holding deposit is £24,000 ÷ 52 = £461.54.
For a property with monthly rent of £3,500 (£42,000 per year), the maximum holding deposit is £42,000 ÷ 52 = £807.69.
Letting agents and landlords cannot legally charge more than this amount. A request for a holding deposit equal to one month’s rent, or two weeks’ rent, or any other amount above the one-week cap, is unlawful under the 2019 Act.
If you are asked for a holding deposit above the one-week cap, decline politely and reference the Tenant Fees Act 2019. Reputable London letting agents are aware of this requirement and structure their holding deposit requests accordingly.
The 15-Day Rule
Once a holding deposit is paid, the law requires the landlord or agent to complete the agreement process — or formally decline — within 15 calendar days. This is known as the deadline for agreement.
The 15-day clock begins on the day the holding deposit is received. Within this period:
- The tenant should complete and return any required referencing documentation promptly
- The agent or landlord should complete the referencing and confirm whether they will proceed
- The tenancy agreement should be drafted, agreed, and signed
- The tenancy deposit and first month’s rent should be paid and the move-in date confirmed
If the 15-day deadline passes without the tenancy proceeding for reasons not the tenant’s fault, the holding deposit must be refunded in full to the tenant. The landlord and tenant can agree in writing to extend the 15-day deadline if both parties want more time — but without that agreement, the legal default applies.
When the Holding Deposit Must Be Refunded
The default position is that the holding deposit must be refunded — either by being applied to the first month’s rent or the tenancy deposit at move-in (with the tenant’s written agreement), or by being returned to the tenant if the tenancy does not proceed.
The Tenant Fees Act 2019 specifies the circumstances under which the landlord can retain part or all of the holding deposit. These are limited:
The tenant fails the right to rent check. If the tenant cannot provide adequate proof of their immigration status under the Immigration Act 2014 right to rent requirements — and the tenant knew or should reasonably have known they could not pass this check — the landlord can retain the holding deposit. This does not apply where the tenant provided the correct documentation and the landlord chose not to proceed.
The tenant provides false or misleading information. If the prospective tenant has lied about their financial circumstances, employment, references, or other relevant information that has reasonably influenced the landlord’s decision to let, the holding deposit can be retained.
The tenant withdraws from the agreement. If the tenant decides not to proceed after the holding deposit is paid — for reasons other than the landlord’s breach of obligations or the failure to provide accurate information — the landlord can retain the deposit.
The tenant fails to take reasonable steps to enter into the tenancy. If the tenant becomes unresponsive, fails to provide reasonable referencing information, or otherwise prevents the process from completing within 15 days through their own conduct, the landlord can retain the deposit.
In all other cases — including where the landlord changes their mind, where the referencing identifies issues that the tenant disclosed honestly, or where the 15 days passes without the tenancy progressing through no fault of the tenant — the holding deposit must be refunded in full.
Read also- how often do London rents increase
What Happens at Move-In
When the tenancy proceeds successfully to move-in, the holding deposit is typically applied to one of two purposes by agreement between landlord and tenant:
Applied to the first month’s rent. The most common arrangement — the holding deposit becomes the first payment of rent. The tenant pays the additional amount needed to make up the first month’s rent and tenancy deposit at move-in.
Applied to the tenancy deposit. Less common but legitimate — the holding deposit forms part of the security deposit held in the deposit protection scheme. The first month’s rent is paid separately.
The specific arrangement should be confirmed in writing in the tenancy agreement or in a separate written agreement between landlord and tenant. Once applied, the holding deposit is no longer a separate amount — it is part of the rent or deposit and is treated accordingly.
For the Tenant Fees Act 2019 guidance, check: GOV.UK — tenant fees ban guidance for tenants
Practical Guidance for London Renters
Pay only after you have viewed the property. Never pay a holding deposit for a property you have not personally viewed (or, for international renters, viewed via verified video and confirmed through a licensed agent). The London rental market has its share of fraudulent listings — paying a deposit for a property that does not exist or is not actually available is a common scam.
Confirm the receipt in writing. When you pay the holding deposit, request a written confirmation from the agent or landlord that records: the amount paid, the property address, the date received, the 15-day deadline, and the terms under which the deposit may be retained or refunded.
Get referencing documentation ready in advance. Peak season London rentals require fast referencing. Having three months’ payslips, three months’ bank statements, an employer reference contact, identity documents, and any guarantor information ready to send within hours of paying the holding deposit prevents you from accidentally breaching the 15-day deadline.
Read what you are signing. Any pre-tenancy agreement or holding deposit agreement should be read carefully before signing. The terms under which the deposit may be retained should match the Tenant Fees Act 2019 — not impose additional restrictions or penalties.
Know your rights to a refund. If the 15 days pass without the tenancy proceeding, or if the landlord declines to proceed for reasons unrelated to your conduct, you are entitled to a full refund. Request it formally and in writing. If the refund is not provided, the agent can be reported to the relevant redress scheme (Property Redress Scheme or The Property Ombudsman).
For finding agent and landlord redress schemes, check: GOV.UK — letting agent redress schemes
Conclusion
A holding deposit in London is a payment of up to one week’s rent that secures a rental property while referencing completes. It is governed by the Tenant Fees Act 2019, which caps the amount, requires a 15-day completion deadline, and specifies the limited circumstances under which the landlord can retain the deposit if the tenancy does not proceed. Understanding what the holding deposit is, what it covers, and when it must be refunded gives London renters the confidence to act decisively when they find a suitable property — and the knowledge to push back if asked to pay above the legal maximum.
Frequently Asked Questions
What is a holding deposit in the UK?
A holding deposit is a payment of up to one week’s rent paid to a landlord or letting agent to reserve a rental property while referencing is completed. Under the Tenant Fees Act 2019, it is one of only a small number of payments that can legally be requested from prospective tenants in England.
How much is a holding deposit in London?
The legal maximum holding deposit in London is one week’s rent — calculated by dividing the annual rent by 52. For a £2,000-per-month property, this is £461.54. Letting agents cannot legally charge more than this amount. Requests for a holding deposit equal to one month’s rent or above the one-week cap are unlawful.
Is a holding deposit refundable?
Yes — by default, the holding deposit is refundable if the tenancy does not proceed. The exceptions specified in the Tenant Fees Act 2019 are: the tenant fails the right to rent check (when they knew they would), provides false information, withdraws from the agreement, or fails to take reasonable steps to complete the process within 15 days. In all other cases, the deposit must be refunded in full.
How long does a landlord have to refund a holding deposit?
If the landlord chooses not to proceed, withdraws from the agreement, or 15 days passes without the tenancy progressing, the holding deposit must be refunded within seven days of the decision or the deadline being reached. If the landlord fails to refund within this timeframe, the matter can be referred to the agent’s redress scheme or, ultimately, to the local authority for enforcement.
