A holding deposit is an amount that a landlord can take from a tenant to secure their initial interest in the property and giving them exclusivity while undergoing referencing checks. Should the tenants be successful with referencing, the holding deposit amount is deducted from the initial first months' rent that is usually collected.
- You request £250 from a tenant to secure their interest in your property.
- The tenant goes through referencing and is successful.
- The rent for the property is 1000 p/month. While setting up the tenancy, instead of asking the tenants to pay £1000 for the first months' rent they would pay £750 and then 1000 a month as normal therafter.
Common Terms & Conditions applied with holding deposits are that if a tenant withdraws, they forfeit the holding deposit. If the landlord chooses not to proceed with the tenant then the holding deposit can be refunded back to the tenant(s).