Landlord’s Holding Deposit Agreement for AST (England)
This Landlord’s Holding Deposit Agreement is designed for private sector landlords in England who collect a holding deposit before entering into an assured shorthold tenancy agreement.
This template agreement acknowledges receipt of a holding deposit, confirms that the landlord will not let the property to any other person until this agreement is cancelled, or expires (and the tenancy agreement has not been entered into) and outlines the conditions for repaying or retaining the deposit.
Legal Requirements Under The Tenant Fees Act 2019
The Tenant Fees Act 2019 (“the Act”) (which affects England only) has strict rules regarding holding deposits. While not all landlords require them, if one is collected, the Act highlights the importance of having a written agreement in place. Additionally, landlords should be aware of the following provisions regarding holding deposits under the Act:
Deposit cap: The maximum holding deposit allowed is one week’s rent. If a landlord collects more than one week’s rent, this will be a prohibited payment and be in breach of the Act
One holding deposit per property: A landlord can only collect one holding deposit at a time per property. Collecting multiple deposits would constitute a prohibited payment and be in breach of the Act.
Refund timeline: The deposit must be refunded within 7 calendar days of the tenancy being entered into. There is provision for the holding deposit to be applied to the first instalment of rent or towards any permitted security deposit subject to the consent of the prospective tenant. If the prospective tenant consents to the holding deposit being applied to the security deposit, then this must be protected in a tenancy deposit protection scheme.
Deadline for agreement: If the parties (both acting reasonably) fail to enter into a tenancy agreement within 15 days of receipt of the holding deposit paid by the tenant (‘the Deadline for Agreement’) (unless an extension is agreed), the landlord must repay the holding deposit to the tenant within 7 days of the deadline for the agreement.
Retaining the holding deposit: The template agreement specifies the circumstances under which a landlord may retain the deposit. It is important that landlords notify the tenant in writing within 7 days, or they forfeit the right to keep it.
Penalties for Non-Compliance
Landlords can be subject to a fine of up to £5,000 for a first offence. If a further offence is made within five years of the first, this will be a criminal offence and a landlord could be liable for an unlimited fine. Some local authorities may impose a financial penalty of up to £30,000 as an alternative to prosecution.
There is a Letting Agent’s Holding Deposit Agreement (England) which can be used by letting agents collecting holding deposits on behalf of landlords in England and it can be found in the Residential Lettings Terms and Conditions subfolder.
Renting Homes (Fees etc.) (Wales) Act 2016
For landlords in Wales there is a Holding Deposit Agreement for Occupation Contract (Wales) and it can be found in the Renting Homes Wales subfolder.
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