Holding deposit rules in 2026: the 15-day letting agency workflow

A holding deposit in England is capped at one week's rent for the whole proposed tenancy, not one week per applicant. The default deadline for reaching a tenancy agreement is 15 calendar days from receipt, although a different deadline can be agreed with the tenant in writing. If the tenancy goes ahead, the landlord declines it or the deadline passes, the usual refund window is seven days. Retention is only available on limited grounds and the tenant must receive the reason in writing on time.

Those rules come from the Tenant Fees Act 2019 and apply to housing in England. The Renters' Rights reforms did not replace the 15-day holding-deposit process. They did change the surrounding payment sequence: from 1 May 2026, a landlord or agent cannot require or accept rent before both sides have signed the tenancy agreement. The easy mistake is to let a holding deposit drift into the accounts as an informal first rent payment.

Before taking money: define what the payment is for

A holding deposit reserves a property while the agency carries out referencing and other pre-tenancy checks. It is not the tenancy deposit that may later need protection in a government-approved scheme. Keep the two payments, ledgers and customer messages distinct. The separate tenancy deposit guide covers the five- or six-week cap, protection and prescribed-information duties that arise once that deposit is taken.

Calculate one week's rent from the proposed annual rent divided by 52. For joint applicants, that is one cap for the proposed tenancy as a whole. GOV.UK also says an agent must not accept more than one holding deposit for the same tenancy at the same time. Mark the property as held when the payment clears, and prevent another negotiator or branch from taking a second deposit until the first has been repaid or lawfully retained.

Give the applicant a written receipt that identifies the property, proposed tenants, amount, date received and the deadline for agreement. If 15 days will not be workable, agree the replacement date in writing before relying on it. A note in an internal diary is not an agreement with the tenant.

Day 0: start one shared case record

The deadline runs from the day the landlord or agent receives the holding deposit. Open one case record at receipt rather than when referencing begins. It should contain the payment record, advertised rent, cap calculation, deadline, applicants, consent and every request or response that moves the application forward.

Assign an owner and a reviewer. The owner chases documents and keeps the applicant informed; the reviewer decides whether any proposed retention ground is supported. Put the deadline in a team queue with reminders early enough to resolve missing information. The record should show what the landlord and agent did to progress the tenancy, because inactivity by the agency cannot fairly be converted into an applicant failure.

Days 1–10: run checks without inventing new conditions

Use the same disclosed criteria for every applicant and log each request. Referencing may cover identity, income, credit information, landlord references and the statutory Right to Rent check. A failed Right to Rent check can be a ground for retaining a holding deposit, but the check itself has its own prescribed process. Do not treat an unclear document or a pending Home Office response as an automatic failure.

If information appears wrong, separate a material suitability issue from an innocent or irrelevant error. The enforcement guidance gives examples such as materially misstated income or an undisclosed County Court Judgment. It also says a misspelt name, an omitted address that did not affect creditworthiness or a small income error that does not change affordability is not enough on its own. Keep the evidence and the reasoning; do not use a blanket “failed referencing” label.

Rent remains separate. The current GOV.UK landlord and agent guidance, published on 1 May 2026 and updated on 7 July 2026, says rent cannot be required or accepted before the tenancy agreement is signed. After signing and before the tenancy starts, a maximum of one month's rent may be asked for in advance. Build that sequence into payment links and bank-reconciliation rules so staff cannot accidentally accept an early transfer as rent.

Days 11–15: force a clear decision

Before the deadline, the case owner should place the application in one of four states: ready to sign, landlord declining, applicant withdrawing or unresolved. Record who made the decision, when it was made and the evidence relied on. If both sides genuinely need more time, agree a new deadline with the tenant in writing rather than allowing the original date to drift past unnoticed.

The Tenant Fees Act 2019, Schedule 2 sets the legal framework. A refund is required when the tenancy agreement is entered into, when the landlord decides not to proceed or when no agreement is reached by the deadline, subject to the Schedule's exceptions. The current statutory enforcement guidance explains the practical refund and notice periods.

Retention needs a ground, evidence and a written notice

The limited grounds described in the current guidance cover a failed Right to Rent check, the applicant withdrawing, the applicant not taking reasonable steps to enter the agreement while the landlord and agent do, and false or misleading information relevant to suitability. None of these should be an automatic system outcome. Someone should review the evidence and the agency's own conduct before approving retention.

Where the deposit is kept, send the reason in writing within seven days of the landlord's decision not to grant the tenancy or the deadline for agreement, as applicable. The notice should identify the ground, the facts relied on and the decision date. If the required written reason is not given on time, the guidance says the holding deposit must be refunded. A term saying the payment is always non-refundable does not create a lawful retention ground.

If the tenancy is signed, obtain the tenant's consent before applying the holding deposit to the first rent payment or the tenancy deposit. Otherwise, refund it. Do not silently relabel the money in the ledger: the customer record should show the instruction and the destination of the funds.

A control checklist for branches and portfolio teams

• Cap the payment at one week's rent for the whole proposed tenancy.
• Block a second holding deposit for the same property while the first is live.
• Issue the receipt, deadline and any agreed deadline change in writing.
• Track applicant requests, responses and the agency's reasonable steps in one case.
• Keep rent-payment links disabled until both sides have signed.
• Require human review before retaining money and record the statutory ground.
• Queue the seven-day refund or written-reasons deadline from the correct event.
• Reconcile the bank movement to the case and retain proof of refund or consent.

Test the workflow with awkward cases: a joint applicant withdraws, a document needs a Home Office check, the landlord changes their mind, or the proposed signing date falls after day 15. That rehearsal should settle who owns the decision and which clock applies before a real deposit is at risk.

This article covers England and reflects official material available on 13 October 2026. Wales, Scotland and Northern Ireland have different rental frameworks. For the wider English tenancy changes, read the Renters' Rights Act guide or run Tekniti's free readiness check. Agencies designing the hand-offs across negotiators, referencing and accounts can also see the letting agency workflow overview.