Letting Agent’s Holding Deposit Agreement (England)

This Letting Agent’s Holding Deposit Agreement is for use by letting agents in England when collecting a holding deposit from a prospective tenant prior to entering into a tenancy agreement. The letting agent should obtain the authority and consent of the landlord/property owner before entering into this Agreement. 

What This Agreement Does 

This Template:

• Acknowledges receipt of a holding deposit;
• Confirms that the property will not be marketed to other prospective tenants while the Agreement remains in place;
• Sets out the circumstances in which the holding deposit will be repaid or retained; and 
• Establishes a clear period for entering into a tenancy agreement.

The Tenant Fees Act 2019

The Tenant Fees Act 2019 (“the Act”), applies in England and imposes strict rules regarding holding deposits. While not all agents choose to take a holding deposit, where one is taken, a written agreement is strongly recommended. Key provisions of the Act include:

•  A holding deposit must not exceed the equivalent of one week's rent. Any amount above this will constitute a prohibited payment and a breach of the Act. 
• One holding deposit may be taken per property.
• The holding deposit must be repair within 7 calendar days of the tenancy agreement being entered into unless it is applied (with the tenant's consent) towards the first rent payment or the tenancy deposit. Please note under the Renters' Rights Act you cannot encourage, accept, or demand that a tenant pay more than one month's rent in advance before entering the tenancy agreement. For more information on the Renters' Rights Act please refer to the Guidance: Renters’ Rights Act for Residential Landlords
•  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 in accordance with the tenancy deposit protection rules, and the tenant must be provided with prescribed information concerning the same.
• If the parties fail to enter into a tenancy agreement within 15 days of receipt of the holding deposit paid by the prospective tenant(s), the holding deposit to be repaid within 7 days of the Deadline for Agreement, unless an extension has been agreed in writing. 

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.

Compliance is therefore essential for all letting agents operating in England. 

Why Use This Agreement?

Using a professionally drafted holding deposit agreement helps:

• Ensure compliance with current legislation;
• Reduce the risk of disputes with prospective tenants; 
• provide transparency around payments and deadlines; and 
• support a smoother transition into the tenancy. 

When Is This Template Not Suitable

If you are a landlord, you should download the Landlord’s Holding Deposit Agreement for AST (England).

For landlords and lettings agents in Wales please download the Holding Deposit Agreement for Occupation Contract (Wales). 

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