What is a holding deposit or 'reservation deposit'?

A holding deposit or 'reservation deposit' is a payment to a landlord or agency to reserve a property. You pay it before you sign a tenancy agreement and it will forms part of your first rent payment. It is not an additional charge.

How much is a holding deposit/reservation deposit?
A holding deposit cannot be more than 1 week’s rent for the property you want to reserve.


How does the holding deposit/reservation deposit work?

Once an offer is initiated, the owner has 24 hours to either accept, reject or counter. Whilst card details are taken during the offer process no money is taken for a holding deposit until after the offer is accepted. Properties remain on the market until the offer is accepted. Once offers are officially accepted, the preparation of the tenancy agreement and referencing will then begin.


Do you get a holding deposit/reservation deposit back?

The letting agent or landlord may only retain a holding deposit for a rental property under specific circumstances, which are generally aimed at covering situations where the tenant decides not to proceed with the tenancy or fails to take reasonable steps to enter into a tenancy agreement. The rules regarding holding deposits are governed by government legislation, the Tenant Fees Act 2019 which provides clear guidelines on this matter. According to the Act, a holding deposit can be retained on the following grounds:

The tenant withdraws - If the tenant decides not to proceed with the property for any reason, the letting agent can retain the holding deposit as compensation for the time and resources spent on the prospective tenancy.

The tenant doesn't take all reasonable steps to enter into the tenancy agreement - If the tenant fails to provide the necessary information or documentation required to proceed with the tenancy within the agreed timeframe, the holding deposit can be retained by the letting agent.

The tenant fails a Right to Rent check - In the UK, landlords must check that a tenant or lodger can legally rent residential property in England. If the tenant fails this check, the holding deposit can be retained.

The tenant provides false or misleading information - If a tenant provides information that is found to be significantly false or misleading, which affects their suitability as a tenant, the holding deposit can be legally retained by the letting agent or landlord.

What happens to the holding deposit/reservation deposit if the landlord backs out?

PropertyLoop takes precautions to ensure owners and renters know exactly what they're getting and better yet, they're happy with it. In the rare circumstance that the landlord backs out after both parties have accepted the offer, the holding deposit will be returned and refunded to the renter.