Renting an apartment involves different costs for a tenant, and a holding deposit is one of those expenses. It is the amount a tenant pays to the landlord or a letting agent to reserve a property.
By paying a holding deposit, the tenant secures the rental property for themselves, and the landlord gets assurance from the client. Once a landlord or letting agent receives a holding deposit from a tenant, they need to stop further advertising their property.
Holding deposits are different from security deposits. While security deposits are refundable, holding deposits are refunded depending upon the tenant actions. For example, the landlord can keep the holding deposit if the tenant fails to rent the property or gives false information.
A holding deposit is an amount a tenant offers to a landlord or a letting agent to reserve a property. The tenant needs to pay it before they sign in the tenancy agreement. Payment of a holding deposit secures a rental property for the tenant and prevents the landlord or the letting agent from connecting with any other client.
It also prevents them from advertising the property any further. The landlord must return the holding deposit to the tenant if they decide not to rent the property. On the other hand, the landlord can keep the holding deposit if the tenant:
• Decides against or fails to rent the property
• Provides false or misleading information
• Fails to pass a right to rent immigration check
A landlord cannot charge more than one week rent as a holding deposit. So, for example, if a landlord advertises a property for £ 600, the holding deposit will be £150. Charging more money than one week rent as a holding deposit is a punishable offence, and the landlord or letting agent will need to encounter a penalty if they happen to practice it.
The use of a holding deposit is of vital importance in rental dealings. A tenant can reserve a rental property by paying a holding deposit until they manage to move in. Similarly, this amount enables the landlord to secure a lease for their rental property within a quick time.
So, using a holding deposit makes it easier for the tenant and the landlord to make their dealings safe and more effortless. While this deposit allows the tenant to secure a property till they move and attain peace of mind, it compensates the landlord for any waste of money and time caused by the tenant actions.
