Understanding Holding Deposit vs Security Deposit in Wales

Renting a home in Wales involves several upfront payments, including a holding deposit and possibly a security deposit. Understanding the differences between these two types of deposits is crucial for protecting your rights as a renter. This guide explains what each deposit covers, the rules landlords must follow, and what to do if disputes arise—all under current Welsh housing law.

What Is a Holding Deposit?

A holding deposit is the money you pay to a landlord or letting agent to reserve a property before your tenancy agreement is signed. In Wales, the holding deposit:

• Is capped at a maximum of one week’s rent.
• Shows you are serious about renting the property.
• Should be refunded, except in specific circumstances (e.g., if you provide false information).

Landlords must provide clear written terms detailing when the holding deposit may be withheld, such as failing the referencing process or not entering into the tenancy by the agreed deadline.

When Can a Holding Deposit Be Withheld?

The holding deposit can only be withheld in specific cases, such as if you provide misleading information or choose not to proceed. The landlord must explain clearly and in writing why they are keeping the deposit. For more on rules, visit the official Welsh Government guidance on tenant fees.

What Is a Security Deposit (Tenancy Deposit)?

A security deposit, sometimes called a tenancy deposit, is paid to cover potential damage, unpaid rent, or other breaches of the tenancy agreement. The key points in Wales are:

• Security deposits are typically capped at the equivalent of five weeks’ rent.
• The landlord must protect the deposit in a government-approved scheme within 30 days of receiving it.
• You must be given specific ‘prescribed information’ about your deposit scheme.

If you don’t receive this information within 30 days, or your deposit is not protected, you can apply to the court for compensation and restrictions may be placed on your landlord’s ability to evict you.

Deposit Protection Schemes

Approved schemes include:

• Deposit Protection Service (DPS)
• mydeposits
• Tenancy Deposit Scheme (TDS)

To resolve disputes about your security deposit, your scheme offers a free dispute resolution service.

Legal Protections and Official Forms

Both holding and security deposits are regulated under the Renting Homes (Fees etc.) (Wales) Act 2019 and further guidance is outlined in the Renting Homes (Wales) Act 2016¹.

Relevant Official Forms

• Deposit Prescribed Information Form: This must be completed by your landlord or agent within 30 days of taking a security deposit. It gives details about your tenancy deposit scheme. For example, if you move into a property and pay a security deposit, your landlord must use this form to inform you which scheme your deposit is protected with. See official DPS Prescribed Information details.
• RHW10 - Application to the Residential Property Tribunal Wales: Use this if you wish to challenge your landlord’s retention of a holding deposit or dispute the handling of your security deposit. For example, if your landlord refuses to return a deposit and you believe this is unfair, you can submit this form. Find guidance and access the form on the Residential Property Tribunal Wales official site.

If you believe your deposit has not been handled correctly, keep all correspondence and evidence ready before submitting any complaints.

Which Tribunal Handles Deposit Disputes?

In Wales, the Residential Property Tribunal Wales oversees disputes between landlords and tenants relating to holding deposits, tenancy deposits, rent increases, and other housing matters.

Key Legislation

• Renting Homes (Fees etc.) (Wales) Act 2019
• Renting Homes (Wales) Act 2016

Both are essential for understanding your deposit rights as a tenant in Wales.

FAQ: Holding Deposit vs Security Deposit in Wales

1. Is a holding deposit always refundable?
   Holding deposits are usually refundable, unless you provide false information, withdraw from the agreement, or don’t take reasonable steps to progress the tenancy. The terms must be stated clearly by the landlord or agent.
2. How much can my landlord ask for a security deposit in Wales?
   A security deposit is generally capped at five weeks’ rent, as outlined by law. Higher amounts are not usually allowed.
3. How do I check if my security deposit is protected?
   Your landlord must provide written confirmation of which protection scheme is used within 30 days. You can also check directly with the three government-approved schemes using your tenancy details.
4. What if there is a dispute over my deposit?
   If you can't resolve the matter with your landlord, use your scheme’s dispute resolution service or apply to the Residential Property Tribunal Wales using the RHW10 form.
5. Can my landlord ask for both a holding deposit and a security deposit?
   Yes, but the holding deposit is to reserve the property and must be handled according to strict legal rules. It is separate from the security deposit, which is typically paid when signing the tenancy agreement.

Conclusion: Key Takeaways

• Holding deposits reserve a property before you sign a tenancy; security deposits protect against damage or unpaid rent during your tenancy.
• Both deposit types are governed by Welsh law, offering clear renter protections—make sure you receive all required paperwork and information.
• If issues arise, contact the deposit scheme or Residential Property Tribunal Wales for guidance and dispute resolution.

Need Help? Resources for Renters

• Welsh Government: Tenant’s Guide
• Residential Property Tribunal Wales – for independent dispute resolution
• Shelter Cymru Advice – free support and guidance for renters
• Deposit Protection Service (DPS)

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1. Renting Homes (Fees etc.) (Wales) Act 2019
2. Renting Homes (Wales) Act 2016

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