Understanding Holding and Security Deposits for Renters in England

Knowing the difference between a holding deposit and a security deposit is essential for anyone renting in England. Both serve distinct purposes, with unique rules and protections under UK law. This guide breaks down each type, so you’re clear on your rights and obligations, helping you avoid misunderstandings and safeguarding your money.

What Is a Holding Deposit?

A holding deposit is an amount (usually up to one week’s rent) paid to a landlord or letting agent to reserve a property before the actual tenancy agreement is signed. It temporarily removes the property from the market while the final checks and paperwork are completed.

How Much Can Be Charged?

• By law, a holding deposit cannot exceed one week’s rent.
• This maximum is set by the Tenant Fees Act 2019.^[1]

When Is It Refunded?

• If you sign the tenancy, it must be returned or put towards your rent or security deposit.
• If the landlord decides not to rent to you, you’re usually entitled to a refund unless you have provided false or misleading information, fail Right to Rent checks, or withdraw.

Government guidance on holding deposits is available on the official GOV.UK page about holding deposits.

What Is a Security Deposit?

A security deposit (sometimes called a tenancy deposit) is a larger amount (up to five weeks’ rent, or six if annual rent is over £50,000) taken before you move in, as protection against damage, unpaid rent, or breaches of the tenancy.

Deposit Protection Requirements

• Landlords must protect your deposit in a government-approved Tenancy Deposit Protection (TDP) scheme.
• This must happen within 30 days of receiving your security deposit.
• You should receive ‘prescribed information’ about where and how your deposit is protected.

How Much Can Be Taken?

• Usually up to five weeks’ rent (or six if rent is over £50,000 per year).
• This is governed by the Tenant Fees Act 2019, Section 3.^[1]

Key Differences Between Holding and Security Deposits

While both involve payments to secure your future home, their legal treatment, refund conditions, and purposes differ:

• Holding Deposit: Paid to reserve the property before the tenancy agreement is signed. Limited to one week’s rent and subject to strict refund rules.
• Security Deposit: Taken before you move in, protected in a government scheme, and can be withheld (in part) for damage, rent arrears, or breach of tenancy conditions.

Returning Your Deposits: What Renters Should Know

Knowing when and how your holding or security deposits must be returned can reduce disputes and stress in the renting process.

Security Deposit Refunds

• At tenancy end, your landlord must return your deposit within 10 days of agreeing how much you’ll get back.
• If there is a dispute, your deposit stays protected in the TDP scheme until the issue is resolved.

Holding Deposit Refunds

• Should be returned or applied towards your first rent or security deposit if you go ahead with the tenancy.
• Can be withheld (in part or whole) only for legally permitted reasons, such as misleading statements on your application.

Relevant Forms and How to Use Them

• Deposit Protection Prescribed Information Form
  When used: Your landlord or letting agent must provide you with this within 30 days of receiving your security deposit. It confirms how your deposit is protected.
  Practical tip: Save this document—it's essential if you ever need to challenge deposit deductions.
  Download the official prescribed information.
• Dispute Submission (via TDP Scheme)
  When used: If you and your landlord can't agree on how much of the security deposit should be returned, you may use the free dispute resolution service in your deposit scheme.
  Practical tip: Initiate disputes via your scheme's website:
  • Deposit Protection Service (DPS)
  • mydeposits
  • Tenancy Deposit Scheme

The main tribunal handling disputes in England is the First-tier Tribunal (Property Chamber) - Residential Property.

The current governing law is the Tenant Fees Act 2019.^[1]

Frequently Asked Questions (FAQs)

1. Can my landlord keep my holding deposit for any reason?
   No. Landlords can only keep your holding deposit if you provide false or misleading information, fail Right to Rent checks, withdraw your application, or take too long to move forward. Otherwise, it must be returned or used towards your rent or security deposit.
2. How do I check if my security deposit is protected?
   You should receive information from your landlord within 30 days specifying the scheme. You can also check or contact all approved schemes directly via the government deposit protection page.
3. What can be deducted from my security deposit?
   Deductions are only allowed for things like unpaid rent, damages beyond fair wear and tear, or breaches of the tenancy agreement. Full breakdowns must be provided.
4. What should I do if my landlord won’t refund my deposit?
   Raise a dispute through your deposit protection scheme’s free resolution service. If this fails, you can escalate to the First-tier Tribunal (Property Chamber).
5. Are holding and security deposits covered by the same law?
   Both are regulated under the Tenant Fees Act 2019, but each has different rules and protections.

Key Takeaways for Renters

• Understand the difference: holding deposits reserve a property; security deposits protect against damage or unpaid rent.
• Security deposits must legally be protected using a government scheme.
• If in doubt, seek guidance early to protect your money and rights.

Need Help? Resources for Renters

• GOV.UK Renting Guidance
• Shelter England – Free Advice for Renters
• Citizens Advice – Private Renting Help
• First-tier Tribunal (Property Chamber)

---

1. Tenant Fees Act 2019

Categories

Tenant Rights & Responsibilities Rent, Deposits & Increases Tenancy Types & Agreements Moving In & Out Procedures Repairs, Maintenance & Housing Standards Eviction Notices & Repossessions Shared Housing, HMOs & Lodgers Discrimination, Harassment & Accessibility Utilities, Bills & Council Tax Affordable Housing, Social Housing & Benefits Dispute Resolution & Housing Tribunals Health, Safety & Fire Regulations Privacy, Landlord Entry & Surveillance Unusual & Special Tenancy Situations Renters’ Insurance & Liability Homelessness Support & Post-Eviction Help Landlord Duties, Licensing & Penalties Housing Law, Legal Updates & Case Studies Mental Health, Disability & Vulnerable Renters’ Rights Rent Repayment Orders & Compensation