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Letting Agent’s Holding Deposit Agreement for AST (England)


This Letting Agent’s Holding Deposit Agreement is for use by a letting agent in England when collecting a holding deposit prior to entering into an assured shorthold tenancy agreement on behalf of the landlord. The letting agent must have the authority and consent from the owner of the property prior to entering into this agreement on its behalf.

This Template Agreement acknowledges receipt of a holding deposit, it confirms that the letting agent 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 it sets out when the holding deposit is to be repaid and retained.

The Tenant Fees Act 2019 (“the Act”) (which affects England only) introduced various rules regarding holding deposits. Not all agents collect holding deposits but if one is collected, the Act highlights the importance of having a written agreement.

Agents must not collect more than one holding deposit per property at any one time otherwise this will amount to a prohibited payment and this will be a breach of the Act.

The Act introduced a cap on the amount of a holding deposit to be collected from prospective tenants to reserve a property. A letting agent must not collect more than one week’s rent. If a letting agent collects more than one week’s rent, this will be a prohibited payment and the agent will be in breach of the Act.

Under the Act a holding deposit must be refunded within 7 calendar days of the tenancy being entered into (although 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 within a tenancy deposit protection scheme.

If the parties (acting reasonably) fail to enter into a tenancy agreement within 15 days of receipt of the holding deposit paid by the prospective tenant(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. You must write to the prospective tenants within 7 days if the holding deposit is being retained otherwise you forego the right to retain the deposit.

A breach of the Act can result in 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 an agent 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.

Agents will also not be able to evict a tenant on behalf of the landlord using the section 21 eviction procedure to regain possession until they have repaid an unlawfully retained holding deposit.

There is a Landlord’s Holding Deposit Agreement (England) which can be used by landlords collecting holding deposits and it can be found in the New Tenancy Forms, Letters and Checklists for Residential Landlords subfolder.

The Renting Homes (Fees etc.) (Wales) Act 2019 which is due to come into force on the 01 September 2019 contains similar provisions regarding holding deposits. A specific holding deposit agreement for use in Wales will be produced prior to this act coming into force.

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