What Are Rental Application Fees and Holding Deposits?
When you want to rent a property in the UK, you may come across terms like “application fees” and “holding deposits.” Understanding what these mean can help you avoid unnecessary costs and know your rights.
Rental application fees are charges that landlords or letting agents used to ask for when you applied to rent a property. These fees often covered things like reference checks, credit searches, and administrative costs. However, since the introduction of the Tenant Fees Act 2019 in England (and similar rules in other parts of the UK), it is now illegal for landlords and agents to charge most fees to tenants, including application fees. This means you should not be asked to pay any fee just to apply for a tenancy or to have your references checked.
Holding deposits are different. A holding deposit is a payment you make to show you are serious about renting a property. It asks the landlord to reserve the property for you while your application is processed and references are checked. The maximum a landlord or agent can ask for as a holding deposit is capped by law – currently, it cannot be more than one week’s rent for the property.
The key difference is that application fees were non-refundable charges for processing your application, while holding deposits are a refundable payment to reserve the property. If your application is successful, the holding deposit is usually put towards your first month’s rent or security deposit. If your application is unsuccessful, you may be entitled to get your holding deposit back, depending on the circumstances.
It’s important to know your rights when paying any money to rent a home. For more details on how holding deposits relate to other payments, and what happens if things go wrong, you can read our guide on Rental Deposits Explained: Your Rights and How to Get Your Money Back.
Legal Limits on Fees Landlords and Agents Can Charge
The Tenant Fees Act 2019 brought major changes to what landlords and letting agents can charge tenants in England. Before this law, tenants often faced a range of upfront fees just to apply for a property. Now, most of these charges are banned, making the rental process fairer and more transparent.
Maximum Amount for Holding Deposits
A holding deposit is a payment you make to reserve a property while your application is processed. Under the law, landlords and agents can only ask for a holding deposit equal to one week’s rent. For example, if the monthly rent is £800, the maximum holding deposit allowed is about £184 (calculated as £800 x 12 ÷ 52). Charging more than this is illegal.
Ban on Application Fees
The Tenant Fees Act 2019 also banned most upfront application fees. Landlords and agents can no longer charge you for things like referencing, credit checks, or viewing a property. This means you should not be asked to pay any fee just to apply or have your application considered.
Fees That Are Still Allowed
While most fees are banned, some charges remain legal. These include:
- Rent and a refundable tenancy deposit (capped at five weeks’ rent for most properties)
- A holding deposit (capped at one week’s rent)
- Charges for lost keys or late rent payments (but only if these are reasonable and clearly stated in your tenancy agreement)
- Fees for changes to the tenancy, if you request them (capped at £50 or the reasonable cost)
For a full list of what landlords can and cannot charge, you can review the Tenant Fees Act 2019.
If you’re interested in how these rules fit with other legal responsibilities around deposits, see our section on Handling Deposits.
Understanding these limits helps protect you from unfair charges and ensures you only pay what the law allows when renting a home.
Your Rights Regarding Holding Deposits
When you pay a holding deposit to secure a rental property, you have important rights under UK law. A holding deposit is a payment made to show you are serious about renting. It is usually limited to one week’s rent.
When You Should Get Your Holding Deposit Back
You are entitled to get your holding deposit back in most situations. If the landlord decides not to go ahead with the tenancy, or if the agreement is not reached within 15 days (unless you agree to a different deadline), the deposit should be returned to you. For example, if the landlord changes their mind or fails to complete necessary paperwork, you should receive a full refund.
When the Landlord Can Keep the Holding Deposit
There are specific circumstances where the landlord or letting agent can keep your holding deposit. This can happen if you:
- Provide false or misleading information as part of your application (for example, lying about your income or references)
- Fail a right to rent check
- Withdraw from the tenancy after paying the deposit
- Take too long to respond or do not take reasonable steps to enter into the tenancy agreement
Landlords cannot keep your holding deposit simply because they change their mind or find another tenant. For more detailed information on how deposits should be handled, see the Handling Deposits section of our essential guide.
Time Limits for Returning Holding Deposits
By law, the holding deposit must be returned within seven days of either the landlord deciding not to proceed, or the deadline for agreement passing without a tenancy being entered into. If you move forward and sign the tenancy agreement, the holding deposit can either be returned to you or put towards your first rent payment or tenancy deposit.
How Disputes Over Holding Deposits Are Handled
If you believe your holding deposit has been unfairly withheld, start by contacting the landlord or letting agent to resolve the issue. If this does not work, you can make a formal complaint or seek help from your local council. For official guidance on your rights and how disputes are handled, visit the Tenancy deposit protection: Overview – GOV.UK.
Understanding your rights helps ensure you are treated fairly during the rental process. Always ask for a written receipt and keep records of all communications regarding your holding deposit.
Refunds and What Happens if Your Application Is Unsuccessful
When you pay a holding deposit or application fee, you have important rights if your rental application does not go ahead. Here’s what you need to know about getting your money back and what to do if things go wrong.
Your Right to a Refund
If your application is rejected – for example, if the landlord chooses another tenant or decides not to rent out the property – you are usually entitled to a full refund of your holding deposit. The law in England, for instance, requires landlords and letting agents to return the holding deposit within seven days of their decision, unless you gave false or misleading information, failed a right to rent check, or withdrew your application.
If the Landlord Changes Their Mind
Sometimes, a landlord might change their mind after taking a holding deposit. If this happens and it’s not your fault, you should get your holding deposit back in full. This applies even if the landlord simply decides not to rent out the property anymore or chooses another tenant.
How to Ask for Your Money Back
If you’re owed a refund, start by contacting the landlord or letting agent in writing. Clearly state why you believe you are entitled to your money back and reference any relevant dates and details. For step-by-step advice and a free template letter, visit Get a holding deposit refund – Shelter England.
What If a Refund Is Unfairly Withheld?
If your landlord or letting agent refuses to refund your holding deposit or application fee without good reason, you have options. Keep a record of all your communication and any evidence, such as emails or receipts. You may be able to resolve the issue informally, but if not, you can take further action. For more guidance on how to challenge unfair practices and resolve disputes, see our page on How to Resolve Contract and Consumer Disputes in the UK.
If your issue is about a different type of deposit, such as a tenancy deposit, you can learn more about your rights and the refund process on our Rental Deposits Explained: Your Rights and How to Get Your Money Back page.
Understanding your rights around refunds can help you avoid losing money when renting a property. Always check the terms before paying any fees or deposits, and don’t hesitate to seek advice if you feel you’ve been treated unfairly.
How to Protect Yourself When Applying to Rent
When applying to rent a property, it’s important to protect yourself from unexpected or unfair charges. Here are some practical steps to take before you hand over any money or sign any agreements.
Check What Fees You Might Be Asked to Pay
Before you start the application process, ask the landlord or letting agent for a full list of any fees and deposits. In England, most application fees are banned, but some charges – like a holding deposit – are still allowed. Make sure you understand exactly what you could be asked to pay, and compare this with what the law permits.
Questions to Ask Landlords or Agents
Don’t be afraid to ask clear questions, such as:
- What fees or deposits are required, and what are they for?
- How much is the holding deposit, and under what circumstances is it refundable?
- Are there any other charges during the application process?
- What happens if the landlord decides not to rent to me, or if I change my mind?
Getting these answers in writing helps you avoid confusion and gives you evidence if there’s a dispute later on.
Get Receipts and Written Agreements
Always ask for a receipt whenever you pay a fee or deposit. Ideally, get a written agreement that sets out:
- The purpose of the payment
- The conditions for refunding or keeping the deposit
- The timeframe for returning your money if the application doesn’t go ahead
This paperwork is vital if you need to challenge an unfair charge or claim a refund.
Know Your Rights
Understanding your rights as a tenant is key to avoiding unfair charges. For example, there are strict rules about how much a landlord can ask for as a holding deposit – usually no more than one week’s rent. If your application is unsuccessful, you are often entitled to a refund. Knowing these rules makes it easier to spot when something isn’t right.
If you want to see the full rental process from start to finish, check out this step-by-step guide to applying for a rental property. For more about how deposits and rent payments should be handled by landlords, you might also find our overview on handling deposits and rent payments useful.
Finally, if you’d like help documenting your application, you can use a free rental application template to keep track of fees, deposits, and other important details. This can be a helpful reference if you need to resolve any issues later on.
Related Topics to Know When Renting
When renting a property, there are several important topics to understand beyond application fees and holding deposits. Knowing your rights and responsibilities can help you avoid problems and make the process smoother.
Discrimination Protections When Applying
Landlords and letting agents must not discriminate against you based on characteristics like race, religion, disability, gender, or sexual orientation. This applies during the entire rental application process. If you feel you have been treated unfairly, you can learn more about your rights and what counts as discrimination in our guide on Discrimination When Applying to Rent: UK Legal Overview. For official advice and examples of what landlords can and cannot do, see Shelter England’s resource on Discrimination and right to rent checks.
The Role of Guarantors
Sometimes, landlords ask for a guarantor – someone who agrees to pay the rent if you cannot. This is common if you have a low income, are a student, or have limited rental history. A guarantor’s legal responsibilities can be significant, so it’s important to understand what you and your guarantor are agreeing to. For a full explanation, visit What Does a Guarantor Do? UK Rental Agreements Explained.
Rental References and What to Expect
Most landlords will request references before agreeing to rent to you. These usually come from previous landlords or employers and help show that you are a reliable tenant. If you’re unsure what information can be asked for, or how to provide references if you’re renting for the first time, read our overview: Rental References: Legal Overview for UK Tenants and Landlords.
Right to Rent Checks and Share Codes
By law, landlords must check that tenants have the right to rent in the UK. This often involves showing identity documents or providing a digital share code if you’re not a UK citizen. Knowing how these checks work can help you prepare the right documents and avoid delays. For details, see Share Codes Explained: Right to Rent Checks for Tenants and Landlords.
Understanding Rental Deposits
In addition to holding deposits, you may also need to pay a rental deposit. This is separate and is held as security against damage or unpaid rent. There are strict rules about how deposits must be protected and when you can get your money back. To learn more, see our guide: Rental Deposits Explained: Your Rights and How to Get Your Money Back.
For a complete picture of the rental application process and your rights at every stage, you can return to our Rental Applications: UK Legal Overview.
If you have more questions or face a specific issue, Contend’s AI Legal Assistant can help. Get clear, personalised answers about your rights, what to do if you face discrimination, or how to handle problems with guarantors or deposits. Contend can also guide you on next steps for your situation and help you create tailored letters or documents to communicate with landlords or letting agents. Start a conversation with Contend to get practical legal help with your rental application today.
