Holding deposits — what they are, when we take one, and the rules around refunds
We take a holding deposit when a tenant wants a property off the market while their referencing and tenancy paperwork is completed. The amount, the time limits, and the circumstances in which a holding deposit can be retained or refunded are governed by the Tenant Fees Act 2019 (Schedule 1 paragraph 3) and, since 1 May 2026, by the Renters' Rights Act 2025 in the way it interacts with the new bidding ban. This page sets out what a holding deposit is, how much we can take, the 15-day "Deadline for Agreement", the four circumstances in which a deposit can be lawfully retained, and the operational practice we follow at Harvey W James on every managed letting. The page is for tenants and landlords; the source-of-truth document is Essential Terms and Charges v2.1.5 §22 [BIDDING-001] and §39 [DEPOSIT-001].
What a holding deposit is and what it is not
A holding deposit is a payment made by a prospective tenant that demonstrates a serious intent to rent the property at the advertised rent and, in return, takes the property off the market while the landlord (or agent) completes referencing, right-to-rent checks, and tenancy paperwork. It is not the same as the tenancy deposit. The tenancy deposit is a security held in an approved deposit-protection scheme against unpaid rent and damage at the end of the tenancy, and is governed by Schedule 5 of the Housing Act 2004; see the Rent Protection page for how that interacts with rent-protection cover. A holding deposit is a separate, smaller, pre-tenancy payment that either becomes part of the tenancy deposit or the first month's rent when the tenancy goes ahead, or is refunded to the tenant in the circumstances set out below.
A holding deposit is the only pre-tenancy fee a letting agent or landlord may lawfully take from a prospective tenant in England, alongside the tenancy deposit and the first month's rent. Every other fee that was charged pre-2019 (referencing fees, admin fees, "deed of guarantee" fees, viewing fees) is prohibited under section 1 of the Tenant Fees Act 2019. Any agent or landlord asking for any other pre-tenancy payment is committing a banned-fees offence under the Act, enforceable by Trading Standards with penalties of up to £5,000 for a first offence and unlimited fines or criminal proceedings for repeat breaches.
How much we can take — the one-week cap
The Tenant Fees Act 2019 caps a holding deposit at one week's rent. The calculation is the annual rent divided by 52. For a property advertised at £2,400 per calendar month, the maximum holding deposit is £553.85 (£2,400 × 12 ÷ 52). For a property at £4,000 pcm, the maximum is £923.08. A landlord or agent who takes more than one week's rent as a holding deposit is in breach of the Act regardless of how the additional sum is described.
The cap is statutory. It does not change with the post-RRA bidding ban, with the rent level, or with how competitive the property is. At Harvey W James, the holding deposit we ask for is always exactly one week's rent, calculated as above, and is offset against the first month's rent or the tenancy deposit at move-in. The receipt the tenant receives at the time of payment shows the gross amount, the calculation method, and the basis on which it will be retained or refunded.
The 15-day Deadline for Agreement
Once a holding deposit has been paid, the Tenant Fees Act 2019 (Schedule 1 paragraph 8) sets a 15-day Deadline for Agreement. The landlord or agent must either enter into a tenancy agreement with the prospective tenant within 15 days of receiving the holding deposit, or refund the deposit to the tenant by the end of the seventh day after the deadline. The 15 days can be extended in writing if both parties agree — for example, where referencing is delayed because the tenant's previous landlord is slow to respond, or where the tenant requests more time to consider terms. Any extension must be agreed in writing before the original deadline expires.
The Deadline for Agreement is the operative time constraint on the whole pre-tenancy process. Our standard managed-property practice is to send the tenancy paperwork within 48 hours of the holding deposit clearing, and to push for tenancy execution within 7 to 10 days of holding-deposit receipt. The 15-day statutory window is the maximum; running tight against it is operationally undesirable because it gives the tenant less time to read the tenancy terms and accelerates any referencing complications into a high-pressure window.
The four lawful grounds for retaining a holding deposit
If the tenancy does not go ahead, the landlord or agent can only retain the holding deposit on the four grounds listed in Schedule 1 paragraph 5 of the Tenant Fees Act 2019. All four grounds require written notice to the tenant within seven days of the decision not to enter into the tenancy, setting out the specific ground relied on and the basis for it.
- Ground 1 — Failure of right-to-rent check. Where the prospective tenant does not have the legal right to rent residential property in the UK under the Immigration Act 2014 (or where their right has expired and cannot be evidenced through the Home Office service), the landlord may retain the holding deposit. The check itself is a statutory obligation on the landlord; failing the check is the tenant's barrier.
- Ground 2 — Tenant provides false or misleading information. Where the tenant has given false information that the landlord (or agent) is reasonably entitled to rely on in deciding whether to grant the tenancy, the deposit may be retained. This is a narrow ground. It covers material misrepresentation (declaring an income that is not real, failing to disclose a CCJ that would have affected the affordability calculation, declaring single occupancy when the property is to be sub-let, and the like). It does not cover minor errors or omissions that would not have changed the outcome.
- Ground 3 — Tenant withdraws. Where the prospective tenant decides not to proceed with the tenancy, the deposit may be retained. The tenant's right to change their mind is recognised, but the cost to the landlord of taking the property off the market is also recognised, and the deposit covers that cost. This ground does not require any failing on the tenant's part — a tenant who simply changes their mind, or finds a different property, or has a change in circumstances, can be retained against.
- Ground 4 — Tenant fails to take reasonable steps to enter into the tenancy. Where the tenant does not engage with the referencing process, does not respond to communications, does not supply requested documents, or otherwise does not take the reasonable steps the landlord would expect, the deposit may be retained. The word "reasonable" sets the standard. A tenant on holiday for three days during the referencing window who promptly engages on return is taking reasonable steps; a tenant who ignores the agent for two weeks is not.
The four grounds are exhaustive. There is no fifth ground for "the landlord changed their mind" or "the property is no longer available" or "we found a better tenant". If none of the four grounds applies, the deposit must be refunded in full within seven days of the decision not to enter into the tenancy or by the end of the seventh day after the Deadline for Agreement, whichever is earlier.
What we do with the holding deposit when the tenancy goes ahead
If the tenancy goes ahead (the standard outcome on a Harvey W James let, since we reference and qualify tenants before the holding deposit is taken), the holding deposit is offset against the first month's rent or the tenancy deposit at move-in. The tenant pays the balance of those amounts on or before move-in date. The offsetting is recorded on the move-in statement that the tenant receives, alongside the full breakdown of rent collected, deposit lodged with the deposit-protection scheme, and any other agreed payments.
Where the holding deposit is offset against the first month's rent, the post-RRA Insured Event 11 First Month's Rent Protection cover applies as normal — see the Rent Protection page for how that works. The holding deposit being applied to the first month's rent does not affect the rent-protection position; it simply reduces the cash the tenant needs to pay on move-in day.
The interaction with the post-RRA bidding ban
The Renters' Rights Act 2025 prohibits bidding above the asking price. Section 6 of the Act makes it unlawful for a landlord or agent to invite, encourage, or accept offers above the advertised rent. The holding deposit is taken at the advertised rent. We do not (and cannot lawfully) accept a higher holding deposit in exchange for taking the property off the market ahead of other applicants. Where multiple tenants offer at the advertised rent on the same property, we apply our standard tenant-selection criteria (referencing tier, affordability score, right-to-rent compliance, application order) and take a holding deposit from the first qualifying applicant in line with ETC §22 [BIDDING-001].
The post-RRA position protects tenants from rent escalation at the point of holding-deposit payment, but it also means that the holding deposit is the only way to formally hold a property. A tenant who is interested in a property and intends to apply should pay the holding deposit at the earliest reasonable point. Properties are held in application order until a holding deposit is paid; once paid, the property is off the market until the Deadline for Agreement.
Disputes and complaints
If a tenant believes their holding deposit has been unlawfully retained — for example, where the agent has cited a ground that does not apply, or has failed to give the seven-day written notice required by the Act — the routes for challenge are: first, the agent's own internal complaints procedure (see the Internal Complaints Procedure for the Harvey W James pathway); second, the Property Redress Scheme, the agent-level redress scheme of which Harvey W James is a member; and third, Trading Standards, which has enforcement powers under section 6 of the Tenant Fees Act 2019 and can issue penalties of up to £5,000 (first offence) or unlimited fines (repeat offences). At county-court level, a tenant can sue for the return of the deposit plus reasonable legal costs.
The Property Redress Scheme is the most efficient route in practice. The scheme is free to use for tenants, can order the return of unlawfully retained deposits plus compensation up to £25,000, and operates to typical timeframes of 8 to 12 weeks from complaint to decision. The Trading Standards route is slower but has the additional benefit of triggering enforcement against the agent or landlord, which is appropriate where the issue is part of a pattern of conduct rather than a one-off dispute.
How this fits with the rest of the post-RRA framework
The holding-deposit framework sits inside the wider Tenant Fees Act 2019 framework (which also covers the tenancy deposit cap, default-fee rules, and the prohibited-fees regime) and the post-RRA bidding-ban framework. For the broader regulatory framework, see The Renters' Rights Act 2025. For the tenancy-deposit-scheme rules and the deposit top-up that sits on top, see Rent Protection. For the landlord operational position, see Landlords. For the tenant lifecycle, see Tenants. For terminology, see the Glossary. For specific questions, see the FAQ.
Useful contacts and registers
- Holding-deposit and application enquiries: lettings@harveywjames.com, 020 3865 1500
- General enquiries: info@harveywjames.com
- Complaints: aftercare@harveywjames.com (and see the Internal Complaints Procedure)
- Property Redress Scheme (agent redress): membership PRS010914 — verify here.
- Propertymark Client Money Protection: membership M0243538 — verify here.
- Information Commissioner's Office (data protection): registration ZA312485 — verify here.
This page describes Harvey W James' operational approach to holding deposits under the Tenant Fees Act 2019 (in particular Schedule 1 paragraphs 3, 5, and 8), the Housing Act 2004 (Schedule 5, deposit-protection schemes), and the Renters' Rights Act 2025 (in particular section 6, the bidding ban). The statutory framework set out above is the framework as published; the operative provisions are those in the Acts of Parliament and any supporting regulations. This is not legal advice. For your specific situation seek independent legal advice. Last reviewed against Essential Terms and Charges v2.1.5 (22 May 2026).