Holding deposits in England: the one-week cap, refunds, and the first month's rent
Short answer: A holding deposit in England is capped at one week's rent — the annual rent divided by 52 (Tenant Fees Act 2019, Schedule 1, paragraph 3). The landlord or agent has 15 days to enter into the tenancy. If the tenancy goes ahead, the money is applied to the first rent payment or the tenancy deposit with the tenant's consent. Otherwise it is refunded within 7 days.
How much is a holding deposit? The one-week cap, calculated
The Tenant Fees Act 2019 makes a holding deposit a permitted payment, then caps it. Schedule 1, paragraph 3(3) is blunt: "If the amount of the holding deposit exceeds one week's rent, the amount of the excess is a prohibited payment." Paragraph 3(4) defines the term: "one week's rent" means "the amount of the annual rent payable in respect of the tenancy immediately after its grant, renewal or continuance divided by 52."
So the sum is monthly rent × 12 ÷ 52 — not the monthly rent divided by four. The four-week version is the higher number, which is what makes it a prohibited payment.
| Advertised rent (pcm) | × 12 = annual rent | ÷ 52 = one week's rent | Maximum holding deposit |
|---|---|---|---|
| £1,500 | £18,000 | £346.1538… | £346.15 |
| £2,000 | £24,000 | £461.5384… | £461.53 |
| £2,500 | £30,000 | £576.9230… | £576.92 |
| £3,000 | £36,000 | £692.3076… | £692.30 |
Round down to the penny, never up. Any amount above one week's rent is prohibited, so the rounding direction matters.
The cap is not per tenant. Government statutory guidance for enforcement authorities works the case of three jointly liable tenants and confirms the maximum "for the property as a whole" is a single week's rent. Nor does it flex with demand: since 1 May 2026, section 56 of the Renters' Rights Act 2025 requires the advertised rent to be a stated figure and bans inviting or accepting offers above it.
Does the holding deposit come off the first month's rent?
Yes, with the tenant's consent, and this is the normal outcome. Schedule 2, paragraph 6 of the Tenant Fees Act 2019 says the requirement to repay does not apply "if or to the extent that the amount of the deposit is applied, with the consent of the person by whom it was paid — (a) towards the first payment of rent under the tenancy, or (b) towards the payment of the tenancy deposit."
Note the drafting. The default is repayment; applying the money to rent or the deposit is the exception, and consent is the condition. Where it goes towards the tenancy deposit, paragraph 7 treats it as received by the landlord on the date of the tenancy agreement for protection purposes.
The practical effect for a tenant on a £2,500 flat: £576.92 paid at application, then £576.92 less to find on move-in day.
What is the 15-day deadline for agreement?
Schedule 2, paragraph 2 defines "the deadline for agreement" as "the fifteenth day of the period beginning with the day on which the landlord or letting agent receives the holding deposit." Paragraph 2(2) allows a different day to be agreed with the tenant in writing.
That window covers referencing, right-to-rent checks and tenancy drafting. Fifteen days is the ceiling, not the plan. We send paperwork within 48 hours of the holding deposit clearing and aim to execute inside 7 to 10 days.
When must it be refunded, and when can it be kept?
Schedule 2, paragraph 3 requires repayment where the tenancy is entered into, where the landlord decides before the deadline not to proceed, or where the parties simply fail to agree in time. Paragraph 4 gives a repayment window of 7 days from the relevant date.
The exceptions are narrow and exhaustive:
- False or misleading information (paragraph 9) — but only where the landlord is reasonably entitled to take the difference, or the act of providing it, into account.
- Right to rent (paragraph 8) — where the landlord is prohibited by section 22 of the Immigration Act 2014 from granting the tenancy and neither landlord nor agent could reasonably have known.
- The tenant withdraws (paragraph 10) before the deadline.
- The tenant fails to take all reasonable steps to enter into the agreement while the landlord and agent do (paragraphs 11 and 12).
Two guards sit on top. Paragraph 5 requires written notice within 7 days explaining why the deposit is not being repaid — no notice, no retention. Paragraph 13 switches every exception off if the landlord or agent has breached the fee ban, or behaved such that it would be unreasonable to expect the tenant to proceed.
There is no ground for "the landlord changed their mind" or "we found a stronger applicant". A landlord who withdraws refunds.
Can an agent hold two applicants' money on the same flat?
No, and the point is often missed. Schedule 1, paragraph 3(5) makes a holding deposit a prohibited payment where the landlord or agent already holds an earlier, unrepaid holding deposit on the same housing.
We won't take a holding deposit from two applicants for the same flat. One property, one holding deposit, one clock — and if the first application fails, that deposit is resolved before we open the next.
What changed on 1 May 2026?
The Renters' Rights Act 2025 closed the rent-in-advance route around the cap. Section 9 inserts paragraph 1(1A) into Schedule 1 of the Tenant Fees Act 2019: a payment of rent is a prohibited payment if it is payable before the tenancy is entered into and the tenancy is assured. Section 8 inserts section 4B into the Housing Act 1988, voiding tenancy terms that make rent due in advance beyond the initial rent. Government guidance is plain: landlords and agents cannot require a tenant to pay rent before the assured tenancy agreement is signed.
For international applicants — where six or twelve months up front was once the standard workaround — that route is gone. The answer is covenant strength, not cash: a UK guarantor, or a guarantor product. See guarantor services and student lettings for how we structure those applications.
The holding deposit is now the only money that lawfully moves before signature.
How we handle it
We take one week's rent, calculated as above, and never more. Referencing runs through Goodlord and identity checks through Credas, so the 15-day window is worked rather than waited out. Every receipt states the gross amount, the calculation, and the basis on which the money is retained or refunded. Our full policy sits on the holding deposits page.
On new-build launches, where several qualified applicants can arrive inside the same 48 hours, one holding deposit is taken at a time, and the next application opens only once the first is resolved.
Sources
- Tenant Fees Act 2019, Schedule 1 (permitted payments; holding deposit cap at para 3): https://www.legislation.gov.uk/ukpga/2019/4/schedule/1
- Tenant Fees Act 2019, Schedule 2 (treatment of holding deposit): https://www.legislation.gov.uk/ukpga/2019/4/schedule/2
- Renters' Rights Act 2025, s.8 (prohibition of rent in advance after lease entered into): https://www.legislation.gov.uk/ukpga/2025/26/section/8
- Renters' Rights Act 2025, s.9 (prohibition of rent in advance before lease entered into): https://www.legislation.gov.uk/ukpga/2025/26/section/9
- Renters' Rights Act 2025, s.56 (requirement to state rent; rental bidding): https://www.legislation.gov.uk/ukpga/2025/26/section/56
- Tenant Fees Act 2019: guidance for tenants, GOV.UK: https://www.gov.uk/guidance/tenant-fees-act-2019-guidance-for-tenants
- Tenant Fees Act 2019: statutory guidance for enforcement authorities (as amended by the Renters' Rights Act 2025), GOV.UK: https://www.gov.uk/government/publications/tenant-fees-act-amended-by-the-renters-rights-act-2025/tenant-fees-act-2019-statutory-guidance-for-enforcement-authorities
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