When you rent a property it is likely that the landlord will ask for certain things to secure the property.
A security deposit is a sum paid at the start of the tenancy that is intended to be returned at the end of the tenancy, unless the tenant has broken some part of the agreement i.e. hasn’t paid rent, caused damage to the property, or left the property unclean. If you have an Assured Tenancy Agreement (or AST) the landlord has a legal obligation to protect the deposit in one of the three government approved schemes and give you information about where the deposit has been protected.
Deposits should be a maximum of five weeks rent where the annual rent is less than £50,000 or six weeks rent where the annual rent is more than £50,000.
If you are unable to afford a cash deposit, you can apply to our Rent Deposit Scheme.
Sometimes a landlord might ask for a holding deposit. A holding deposit can be taken before the tenancy is signed with the agreement that the landlord will stop advertising the property while they take up references, credit checks etc. Paying the holding deposit shows commitment on the part of the tenant.
You could lose a holding deposit if you decide not to sign the tenancy or fail to provide something the landlord has asked for to secure the tenancy. You should always make sure you have something in writing about when a holding deposit can be retained and when it will be returned. you should also ask for a sample copy of the tenancy agreement so you have time to read and understand this prior to taking up the tenancy.
The holding fee should not be more than the value of one weeks rent.
You should find out before handing over any money in what situation the money will be handed back to you and when it could be retained by the landlord. This should be given to you in writing and you should consider asking for information about fees, holding deposits, deposits and rent in advance when you first approach the agent so you know what will be expected from you if you decide to rent a property from them.
Usually when you finally agree to sign a tenancy agreement a holding deposit will be topped up and turned into a deposit.