How is a holding deposit different to a tenancy deposit?

A tenancy deposit is equivalent to five weeks’ rent (or two months’ rent in Scotland) and is returned to the tenant at the end of the tenancy. If a tenant does not meet the terms of the tenancy agreement, damages the property, or doesn’t pay their rent or bills, the landlord can deduct costs from the deposit to cover this.

A holding deposit is equivalent to one week’s rent and is paid by the tenant when they apply to rent. The purpose of the holding deposit is to secure the property for the tenant and to show they are serious about renting the property.  The tenant receives their holding deposit as a deduction from their first month’s rent.

If the tenancy can’t go ahead because of the tenant, incurred costs will be deducted from the holding deposit and any remaining funds will be paid to the landlord.

A tenancy deposit must be registered and protected with a government-approved tenancy deposit scheme, but this is not required for a holding deposit.