Before the Tenant Fees Act 2019, landlords and agents could charge prospective tenants a wide range of fees — referencing fees, administration charges, holding deposits at any level, and more. The 2019 Act banned most of these and, where holding deposits are concerned, set a strict framework: the payment must not exceed one week's rent, must be held for a defined reference period, and must be repaid unless one of a limited set of retention grounds applies.
The Tenant Fees Act 2019 applies to all assured shorthold tenancies (ASTs), relevant occupancy agreements, and student lettings in England. From 1 May 2026, all new residential tenancies are periodic from the outset under the Renters' Rights Act 2025 — but the holding deposit rules are unchanged. The rules on holding deposits apply from the moment the landlord or agent takes any payment to reserve a property.
The maximum holding deposit — one week's rent
The Tenant Fees Act 2019 caps the holding deposit at one week's rent:
- The 1/52 calculation: The maximum holding deposit is the annual rent divided by 52. For a property renting at £1,000 per month, the annual rent is £12,000, so the maximum holding deposit is £12,000 ÷ 52 = £230.77. For a property renting at £1,500 per month, the maximum is £18,000 ÷ 52 = £346.15. The calculation is based on the agreed monthly rent for the proposed tenancy — not the asking rent
- One holding deposit per property at a time: A landlord or agent cannot take more than one holding deposit in respect of the same property at the same time. Where a holding deposit has been taken from one prospective tenant, no second holding deposit can be taken from another prospective tenant for the same property while the first holding deposit is outstanding (unless the first has been repaid or applied)
- Prohibited payment if it exceeds the cap: Any holding deposit exceeding one week's rent is a prohibited payment under the Tenant Fees Act 2019. Taking a prohibited payment is an offence under the Act — the enforcing authority (usually the local trading standards authority) can issue a financial penalty of up to £5,000 for a first offence. Repeat offences can result in banning orders under the Housing and Planning Act 2016
- What counts as 'rent' for the calculation: The rent used for the calculation is the proposed rent for the tenancy. If the tenancy agreement has not yet been agreed and the asking rent is subject to negotiation, the holding deposit must be calculated on the basis of the rent as agreed at the time the holding deposit is taken. Where the actual tenancy rent differs from the figure used, the excess must be repaid
- Application fee prohibition: A landlord or agent cannot charge a prospective tenant any application fee, referencing fee, administration charge, or credit check fee in addition to or as a condition of accepting a holding deposit. All these charges are prohibited payments under the Tenant Fees Act 2019. The only payments permitted from a prospective tenant are the holding deposit (up to 1 week's rent) and — once the tenancy commences — the tenancy deposit and the first month's rent
The 15-day reference period — the deadline for the landlord and tenant
Once a holding deposit is taken, both parties have 15 days to complete the referencing process:
- The default 15-day period: Under the Tenant Fees Act 2019, the 'deadline for agreement' is 15 days after the holding deposit is received (or such other period as the landlord and tenant agree in writing before the holding deposit is taken). The deadline for agreement is the date by which both the landlord (or agent) and the tenant must have taken all reasonable steps to enter into the tenancy agreement — or, if the tenancy is not proceeding, by which the holding deposit must have been repaid
- Extending the 15-day period by agreement: The landlord and prospective tenant can agree in writing to extend the reference period beyond 15 days before the holding deposit is taken. The extension must be agreed before — or at the time of — the holding deposit, not after. Where referencing is expected to take longer than 15 days (for example, for a self-employed applicant requiring extensive income evidence), it is best practice to agree an extended period in the holding deposit documentation
- What must happen within the 15-day period: Within the 15 days, the landlord (or agent) must complete referencing and either: (a) offer the tenancy to the prospective tenant; (b) notify the prospective tenant in writing that the tenancy will not proceed and the reason for non-proceeding; or (c) with the tenant's written agreement, extend the reference period. If neither the tenancy agreement is entered into nor a written notification is given within 15 days, the holding deposit must be repaid
- Timing of repayment: Where the holding deposit must be repaid, repayment must be made within 7 days of: the end of the reference period (if no tenancy is agreed); or the date on which the landlord notifies the tenant that the tenancy will not proceed. A landlord who fails to repay within 7 days is holding a prohibited payment — enforceable by the local trading standards authority
Permitted retention grounds — when landlords can keep the holding deposit
The Tenant Fees Act 2019 sets out a limited list of grounds on which a landlord may retain the holding deposit:
- Ground 1 — false or misleading information: The landlord may retain the holding deposit where the prospective tenant provided false or misleading information to the landlord or agent, where that information materially affected the landlord's decision to let the property to that tenant. The false or misleading information must be material — trivial inaccuracies (a transposed digit in a phone number) will not suffice. Relevant false information includes: false employment status, falsely inflated income, undisclosed CCJs or county court judgments, undisclosed adverse credit history, and false right-to-rent documents
- Ground 2 — tenant withdrawal: The landlord may retain the holding deposit where the prospective tenant notifies the landlord or agent in writing that they are withdrawing from the proposed tenancy before the tenancy commences. Withdrawal must be by positive act — a failure to respond to communications is not a withdrawal. If a landlord or agent communicates terms that would not be agreed and the tenant declines, this may not constitute withdrawal by the tenant
- Ground 3 — failure to take reasonable steps to enter into the tenancy: The landlord may retain the holding deposit where the prospective tenant has failed to take reasonable steps to enter into the tenancy agreement within the reference period, and this failure is not because the landlord (or agent) has required the tenant to agree to a prohibited payment or a term which is a prohibited payment in disguise. 'Reasonable steps' means responding to referencing requests, providing required documents (identification, payslips, references), and being available to sign the tenancy agreement
- What landlords cannot rely on — traps: Landlords cannot retain the holding deposit where: the tenant declines to proceed because the landlord has introduced new terms not previously agreed; the landlord (not the tenant) withdraws from the proposed tenancy; the referencing reveals adverse information that the prospective tenant disclosed honestly upfront; or the landlord fails to take reasonable steps within the reference period. In these circumstances, the holding deposit must be repaid in full
- Written notification requirement: Where the landlord intends to retain the holding deposit (wholly or in part), they must give the tenant a written notice within 7 days of the end of the reference period (or of the tenant's withdrawal) setting out: the reason for retention; the amount retained; and, where any part is repaid, the amount repaid and the reason for partial retention. Failure to give this written notice within 7 days means the retained amount becomes a prohibited payment
Applying the holding deposit — when the tenancy proceeds
Where the tenancy does proceed, the holding deposit must be dealt with correctly:
- Applied against first month's rent or tenancy deposit: Where the tenancy commences, the holding deposit must be applied against the first month's rent (or part of it) or against the tenancy deposit. The landlord or agent must specify in writing which it will be applied against — the tenant should receive confirmation before signing the tenancy agreement. The holding deposit cannot simply be retained as an additional charge once the tenancy proceeds
- Interaction with the tenancy deposit cap: The total of the tenancy deposit and any holding deposit that is applied against the tenancy deposit must not exceed 5 weeks' rent (for annual rents below £50,000) or 6 weeks' rent (for annual rents of £50,000 or above). Where a 1-week holding deposit is applied against the tenancy deposit, the landlord can still take a further tenancy deposit of up to 4 (or 5) weeks' rent — provided the total does not exceed the cap
- Record-keeping: Landlords and agents should keep written records of all holding deposits taken — date received, amount, property address, reference period agreed, outcome (tenancy proceeded/failed), how the deposit was applied or repaid. HMRC may also require records of holding deposits as part of rental income documentation
Frequently asked questions
How much can a landlord charge as a holding deposit?+
Under the Tenant Fees Act 2019, the maximum holding deposit is one week's rent — calculated as the annual rent divided by 52. For a property renting at £1,000 per month, the maximum holding deposit is £230.77 (£12,000 ÷ 52). Charging more than this is a prohibited payment and can result in a financial penalty of up to £5,000.
Can a landlord keep a holding deposit if the tenant pulls out?+
Yes, in limited circumstances. A landlord can retain the holding deposit where: the tenant provided false or misleading information that materially affected the landlord's decision; the tenant withdraws from the tenancy in writing; or the tenant fails to take reasonable steps to enter into the tenancy within the 15-day reference period. The landlord must give the tenant written notice of the retention reason within 7 days.
How long does a landlord have to return a holding deposit?+
Where the tenancy does not proceed (and no retention ground applies), the holding deposit must be repaid within 7 days of the end of the reference period or within 7 days of the landlord notifying the tenant that the tenancy will not proceed. Failing to repay within 7 days means the retained amount becomes a prohibited payment.
What happens to the holding deposit when the tenancy starts?+
Where the tenancy proceeds, the holding deposit must be applied against the first month's rent or against the tenancy deposit — it cannot be kept as an additional charge. The landlord should confirm in writing which it will be applied against before the tenancy commences. The total of any holding deposit applied to the tenancy deposit plus the tenancy deposit itself must not exceed the 5-week (or 6-week) deposit cap.