A holding deposit is a payment to a landlord or letting agent to reserve a property. You should only pay a holding deposit if you are serious about taking on a tenancy.
From the 28 February 2020, a landlord or agent cannot ask you to pay a holding deposit for a property in Wales unless they first provide you with certain written information, including information about the costs involved should you decide to take on the tenancy.
How much is a holding deposit?
A landlord or letting agent cannot charge any higher than the equivalent of 1 weeks’ rent as a holding deposit.
If the rent is charged monthly, use the following calculation to work out the maximum amount of the holding deposit :
Monthly rent x 12 ÷ 52 = maximum holding deposit.
If you have paid anything above this limit since the 1 September 2019 then you should ask the landlord or letting agent for a refund.
A landlord or letting agent cannot charge more than one holding deposit for a property. If you are renting with someone else, the maximum holding deposit should be based on the total rent payable for that property. For example, if the total weekly rent for the property is £300 shared between 3 tenants, the maximum they could be asked to pay as a holding deposit would be £300 between them. They cannot be asked to pay £300 holding deposit each.
What information must the landlord or letting agent give me before I pay a holding deposit?
From the 28 February 2020, before a landlord or agent can ask you to pay a holding deposit, they will have to give you the following information :
- the amount of the holding deposit
- the address of the property
- contact details of the landlord, and/or letting agent
- the type of contract and how long it is for
- the start date of the contract
- how much the rent is and how often it will have to be paid (eg: weekly or monthly)
- the amount of any tenancy deposit
- whether a guarantor will be needed and, if so, what conditions will be attached
- whether they will do any reference checks
- whether they need any extra information from you
- any extra or changed terms to the proposed contract.
This information must be given to you in writing. If you agree, they can send the information to you by email. Otherwise, they must send it to you in the post or hand it to you in person.
This information should help you decide whether to reserve the property.
What happens if the landlord or letting agent does not give me this information?
After the 28 February 2020 you should not pay any holding deposit until you receive this information.
If you pay a holding deposit after that date and you are not given the right information, the landlord or agent must pay it back to you. Until it is paid back the landlord or agent cannot evict you using the ‘section 21 procedure’ .
If you are asked to pay a holding deposit before the 28 February 2020, you should still ask the landlord or agent for this information to help you decide whether to take on the tenancy.
What should happen once I pay a holding deposit?
Once you pay a holding deposit the landlord or agent should stop advertising the property.
What happens next depends on whether you enter into a tenancy agreement :
If you decide to enter into a tenancy agreement
You have 15 days from when you pay a holding deposit to enter into a tenancy agreement. This is called the deadline for agreement.
You can agree a different deadline with the landlord or agent in writing.
If you enter into a tenancy agreement, the landlord should either:
• return your holding deposit within 7 days of the date of the tenancy, or
• put it towards a tenancy deposit or the first rent payment.
If you decide not to rent the property
Your landlord or agent can normally keep the holding deposit if you either:
• decide not to go ahead with the tenancy, or
• fail to take reasonable steps to enter into a tenancy by the deadline (for example, you failed to give your landlord information that was needed in order to set up the tenancy).
If either of these things happen, the landlord or agent can only keep the holding deposit if they gave you all the required information about the deposit before you paid it.
If your landlord decides not to rent to you
You should normally get your holding deposit back within 7 days of the deadline for agreement if the landlord decides not to offer you a tenancy.
The landlord or agent can only keep your holding deposit if the reason for deciding not to rent to you is because you provided false or misleading information in order to get the tenancy (for example, you said your income was a lot higher than it is).
How to get your holding deposit back
Write to the landlord or agent if they keep a holding deposit when they shouldn’t do. Ask for your money back in full.
If you think the landlord or letting agent has unfairly kept your holding deposit get advice. You might be able to claim it back in the county court. Your council should be able to give advice on applying to the county court.
Restriction on eviction
Your landlord or letting agent cannot evict you using the ‘section 21 procedure’ if they have failed to repay to you a holding deposit which should have been returned.
See our pages on eviction of private tenants for more information and get advice as soon as you can if you have received a section 21 notice.
What other fees can a landlord charge me?
Most other letting fees for tenants in Wales are now banned. Find out here which fees are banned and what you will be able to do if you are charged a banned fee.