What Is a Holding Deposit? Can a Landlord Keep It?

Last updated: June 2026 · 7 min read

Quick answer

A holding deposit is a small payment you make to reserve a rental property while the landlord completes referencing and prepares the contract. In England it is legally capped at one week's rent under the Tenant Fees Act 2019. It must be put towards your first rent or security deposit if the tenancy goes ahead, and refunded if the landlord pulls out or fails to act within 15 days. A landlord can only keep it if you withdraw, fail a right-to-rent check, or give false information on your application.

Holding deposits cause a lot of confusion because they look like the main deposit but follow completely different rules. Misunderstanding them is how renters lose money they were entitled to keep. This guide explains exactly what a holding deposit is for, how much it can be, and the narrow set of circumstances in which a landlord is allowed to keep it.

1. What a holding deposit is for

When you decide you want a property, the landlord needs time to reference you and prepare the contract — but they do not want to keep showing the flat to other people while they do. A holding deposit solves this: you pay a small sum, the property comes off the market, and both sides commit to completing the paperwork.

Think of it as a good-faith reservation. It is not a fee for "winning" the property and it is not extra income for the landlord — if all goes to plan it simply rolls into your first payment.

2. How much can it be?

In England and Wales, the Tenant Fees Act 2019 caps a holding deposit at one week's rent. The calculation is the monthly rent multiplied by 12, divided by 52.

Worked example: on a flat at £1,300/month, one week's rent is (£1,300 × 12) ÷ 52 = £300. A landlord asking for more than that — for a single property — is breaking the cap.

In markets without a statutory cap, one week's rent is still the sensible benchmark. Be wary of any request that approaches a full month — that is the size of a real deposit, not a reservation.

3. When can a landlord keep it?

A landlord may only retain a holding deposit in four situations:

✗You decide not to proceed with the tenancy after paying.
✗You fail a right-to-rent immigration check (where one applies).
✗You provide false or misleading information that materially affects your suitability.
✗You fail to take reasonable steps to enter into the agreement — for example, by not responding or not signing.

Important: a landlord cannot keep the holding deposit just because they changed their mind, found a tenant they prefer, or took longer than the deadline to reference you. In those cases you are entitled to the full amount back.

4. Getting it refunded

If the tenancy goes ahead, the holding deposit is credited towards your first month's rent or your security deposit. If it does not go ahead through no fault of yours, the landlord must return the full amount, usually within seven days of the decision (or the 15-day deadline passing).

To protect yourself, always get a written receipt stating the amount, the property, the date, and the agreed deadline. On GeraRent, reservation payments are recorded against the listing and held transparently, so there is never a dispute about what was paid or why.

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GeraRent records every reservation payment against the listing, so you always know where your money stands.

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Frequently asked questions

What is a holding deposit?

A holding deposit is a small payment that reserves a property and takes it off the market while the landlord references you and draws up the tenancy agreement. It is separate from, and much smaller than, the security deposit.

How much is a holding deposit?

In England and Wales it is capped at one week's rent. Elsewhere there is often no statutory cap, but anything more than one week's rent is unusual and worth questioning.

Can a landlord keep my holding deposit?

Only in limited cases: if you pull out of the tenancy, fail a right-to-rent immigration check, provide false or misleading information, or fail to take reasonable steps to enter the agreement. If the landlord withdraws or simply does not act within 15 days, you must get it back in full.

Is a holding deposit refundable?

Yes, in most cases. If the tenancy goes ahead, it is credited against your first rent or security deposit. If the landlord decides not to proceed, or fails to take steps within 15 days, the full amount must be returned to you.

What is the difference between a holding deposit and a security deposit?

A holding deposit is a small reservation fee (about one week's rent) paid before the tenancy. A security deposit is the larger sum (often four to six weeks) paid when the tenancy starts, held against damage or unpaid rent. See our full rental deposit guide.