What are holding deposits?
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When you're going through the process of securing your student accommodation for the next academic year, you may be asked to pay a holding deposit while you go through the referencing process. To help you understand what to expect, we're breaking down exactly what a holding deposit is and how it differs from a tenancy deposit.
What is a holding deposit?
A holding deposit is a sum of money paid by the tenants to the property manager to reserve a property before the tenancy agreement is signed.
How much is a holding deposit?
Legally, a holding deposit cannot be more than one week's rent for the property in question. If you are charged more than this, the property manager must refund any money that was paid above the legal limit.
What is the difference between a holding deposit and a tenancy deposit?
Typically, a holding deposit is paid before you sign your tenancy agreement and become a tenant. The holding deposit secures the property for you while you undergo reference checks. By contrast, a tenancy deposit is paid just before a tenant moves in. It acts as insurance against any possible damages that might occur over the course of the tenancy.
Holding deposits are usually cheaper, as they can legally be no more than one week's rent. On the other hand, in England, tenancy deposits can't be more than five weeks' rent for properties with an annual rent of under £50,000, and 6 weeks' rent for annual rents of over £50,000. In Scotland, tenancy deposits can't be more than two months' rent.
Tenancy deposits must be stored in a government-approved deposit protection scheme for the duration of the tenancy or your property manager could face fines. Holding deposits are not legally required to be kept in any deposit protection scheme.
When do you get a holding deposit back?
If you pass your referencing and right to rent checks, your holding deposit will either be returned, converted to a tenancy deposit, or applied to your first month's rent. Your property manager can only keep your holding deposit if:
- You decide not to rent the property
- You provide wrong or misleading information
- You do not pass a right to rent check
Looking for the perfect property?
Find your ideal student accommodation on StuRents.com, the UK's leading student accommodation platform.
Or, for more information about deposits, check out our blog on how to get your deposit back as a student.
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Article by
Copywriter & Content Marketing Executive at StuRents
Honor is a Copywriter & Content Marketing Executive, working within the Marketing team to create content for StuRents.
