Holding Deposit Agreement for Occupation Contract (Wales)

This Holding Deposit Agreement for Occupation Contract is for use by residential landlords or letting agents in Wales when collecting a holding deposit before entering into a standard occupation contract. The agreement provides clear and legally compliance framework for accepting a holding deposit, explaining the rights and responsibilities of both parties, and setting out the circumstances in which the deposit must be repaid or may be retained. 

Where a letting agent enters into an agreement on behalf of the landlord, they must have the landlord's authority to do so. 

What Does This Agreement Cover?

The template includes all the key provisions required when collecting a holding deposit, including:

• Confirmation that a holding deposit has been received 
• The amount of the holding deposit paid
• The prescribed information required by Welsh legislation 
• Confirmation that the property will be reserved for the applicant 
• Circumstances in which the holding deposit must be refunded, or may be lawfully retained

Holding Deposit Rules In Wales 

The Renting Homes (Fees etc.) (Wales) Act 2019 introduced strict rules regarding holding deposits in Wales. Key requirements include:

• A holding deposit is optional but, if collected, prescribed information must be provided before payment is taken
• The maximum holding deposit must not exceed one week' rent 
• Holding deposits must normally be refunded within 7 days of the occupation contract being entered into, unless they are applied towards the first rent payment or a permitted security deposit. 
• If the holding deposit is applied towards a tenancy deposit/security deposit, it must be protected in an approved tenancy deposit protection scheme.

The agreement has been drafted to reflect these legal requirements and promote compliance with current Welsh legislation. 

Repayment and Retention of Holding Deposits

The template explains the circumstances in which a holding deposit must be repaid, and the limited situations in which it may lawfully be retained. 

If the parties (acting reasonably) fail to enter into an occupation contract agreement within 15 days of receipt of the holding deposit paid by the prospective contract-holder(s) (‘the Deadline for Agreement’) (unless an extension is agreed), the holding deposit must be repaid within 7 days of the Deadline for Agreement.

The template agreement lists the specific circumstances when the holding deposit can be retained. If a landlord or letting agent wants to rely on the exception to repayment, certain information must have been provided by the letting agent (or landlord) to the contract-holder before the holding deposit was paid.

Providing clear written terms helps reduce misunderstandings and supports a fair, transparent letting process. 

Why Compliance Matters

Failure to comply with holding deposit provisions can have significant consequences for landlords and letting agents.  Non-compliance may result in:

• Financial penalties of up to £1,000 and enforcement action
• Criminal prosecution for certain offences 
• Restrictions on serving possession notices in some circumstances 
• Increased risk of disputes with prospective contract-holders 

Using a professionally drafted holding deposit agreement helps landlords and letting agents follow current Welsh legislation while demonstrating good practice. 

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