A tenant wanting to secure a property will be asked to pay a Holding Deposit. Following the Tenant Fees Act 2019, landlords in England and Wales can take a maximum of 1 weeks rent as a Holding Deposit to secure a property. This is calculated like this:
Monthly rent x 12 ÷ 52 = maximum holding deposit
The tenant has 15 days from paying a holding deposit to agree a tenancy.
If the tenancy proceeds the agent or landlord has 2 options:
1) return your holding deposit within 7 days
2) put it towards a security deposit or first rent payment - but only if you agree
If a tenant changes their mind before moving in after signing the agreement, the landlord or agent is witting their rights to withhold the deposit.
If a tenant changes their mind before signing the agreement, they could lose their holding deposit inures it was due to a good reason or the tenant failed to sign the tenancy by the deadline. A good reason could be that the landlord or agent charges disallowed fees.
The agent or landlord would be within their rights to keep the deposit if the tenant failed credit or reference checks.
The same (Tenant Fees) Act of 2019 also resulted in landlords in England and Wales being limited to taking a maximum of 5 weeks’ rent (or 6 weeks if the annual rent is over £50,000) as a Security Deposit for new and renewed tenancies.
Long gone are the days where this deposit can be simply left in the landlords current account. Since 2007 landlords must protect the Security deposit in an approved scheme if the tenant has an assured shorthold tenancy (AST), which is the most common type of tenancy for private renters. The TDP (Tenancy Deposit Protection) scheme ensures that the tenant’s deposit is safeguarded and returned to them at the end of the tenancy, provided they meet the terms of the tenancy agreement.
There are 3 schemes to choose from and it is just personal preference which you use:
At React we use the DPS, but if you do this yourself it's entirely up to you which you use. The monies must be paid into one of these schemes within 30 days of it being received from the tenant.
In England, landlords are required to return the tenant’s deposit within 10 days after both parties have agreed on the amount to be returned at the end of the tenancy. Tenants should have their deposits returned so long as they meet the terms of the tenancy agreement, pay bills and rent, and do not damage the property,
If there is any dispute at the end of the tenancy, the deposit remains protected until a resolution is reached.
