What Are Application Fees and Holding Deposits?
When you’re looking to rent a property in the UK, you may come across terms like “application fees” and “holding deposits.” Understanding the difference between these charges – and your rights around them – can help you avoid unexpected costs and make informed decisions during the rental application process.
Application Fees: Application fees are charges that landlords or letting agents may have previously requested to cover the costs of processing your rental application. These fees often included expenses for background checks, referencing, and administrative work. However, under the Tenant Fees Act 2019 (in England), it is now illegal for landlords or agents to charge tenants most types of application fees. This law was introduced to make renting fairer and more transparent. Similar rules apply in Wales and Scotland, with the Renting Homes (Fees etc.) (Wales) Act 2019 and the Rent (Scotland) Act 1984, respectively.
Holding Deposits: A holding deposit is a sum of money you pay to a landlord or agent to reserve a property before you sign the tenancy agreement. This shows you are committed to renting the property, and in return, the landlord or agent should stop marketing it to other potential tenants. The maximum holding deposit allowed by law in England is one week’s rent. This limit also applies in Wales, and in Scotland, holding deposits are not permitted.
Key Differences: The main difference between application fees and holding deposits is their purpose and legality. Application fees are now generally banned, while holding deposits are allowed within strict limits. Application fees were non-refundable charges for processing paperwork, whereas a holding deposit is a refundable payment to secure a property – unless you provide false or misleading information, fail a right to rent check, or withdraw from the rental.
Why Are These Fees Charged? Historically, landlords and agents charged application fees to cover the costs of referencing, credit checks, and administrative tasks required to assess potential tenants. Now, those costs must be absorbed by the landlord or agent. The only upfront payment you may be asked for is a holding deposit, which is designed to demonstrate your genuine interest in the property.
What Do These Fees Cover?
Referencing and Credit Checks: Landlords or agents may check your employment status, previous rental history, and creditworthiness.
Administrative Work: This includes drawing up tenancy agreements and verifying identification.
Reserving the Property: A holding deposit temporarily takes the property off the market while your application is processed.
If you proceed with the tenancy, the holding deposit is usually put towards your first month’s rent or security deposit. If the tenancy does not go ahead for reasons outside your control, you are typically entitled to a full refund.
Understanding these rules can help you navigate your next move with confidence. For more details on how to prepare and what to expect, explore our guide on the rental application process.
Legal Rules on Application Fees and Holding Deposits
Under UK law, there are strict rules about what landlords and letting agents can charge when you apply to rent a property. These rules are designed to protect tenants from unfair or excessive fees during the rental applications process.
Since 1 June 2019, the Tenant Fees Act 2019 has banned most upfront fees for tenants in England. This means landlords and agents can no longer charge you for things like application fees, credit checks, or referencing fees when you apply for a tenancy. The only payments they are generally allowed to request are:
Rent
A refundable tenancy deposit (capped at five or six weeks’ rent, depending on the annual rent)
A refundable holding deposit
Certain permitted payments, such as for lost keys or late rent (with strict limits)
For a detailed list of what fees are permitted, see permitted payments (Shelter England) or review the official Tenant Fees Act 2019 guidance.
A holding deposit is a payment you can be asked to make to reserve a property while your application is processed. Legally, the maximum amount allowed for holding deposits is capped at one week’s rent for the property you are applying for. Landlords or agents cannot ask for more than this limit.
Once you pay a holding deposit, the landlord or agent must stop advertising the property and process your application. They must also provide you with clear terms about how and when the deposit will be returned or retained.
If a landlord or letting agent charges you a banned fee – such as an application fee, or a holding deposit above the legal limit – they are breaking the law. You have the right to:
Refuse to pay any unlawful fee
Request a refund for any banned fee you have already paid
Report the landlord or agent to your local council’s trading standards team, who can issue fines and take enforcement action
Landlords and agents who charge banned fees may face penalties of up to £5,000 for a first offence, and unlimited fines or even a banning order for repeated breaches.
If your rental application is unsuccessful, or if the landlord decides not to let the property to you, you are usually entitled to get your holding deposit back. However, there are some exceptions – for example, if you provide false information or withdraw from the application without good reason, the landlord may be allowed to keep some or all of the deposit.
Always ask for written confirmation of the circumstances in which your holding deposit will be refunded or retained. If you believe your deposit has been unfairly withheld, you can challenge the decision or seek advice from organisations like Shelter or Citizens Advice.
The rules above apply to England. If you are renting in Scotland, Wales, or Northern Ireland, the law may differ. For example, all tenant fees have been banned in Scotland since 2012, while Wales and Northern Ireland have their own versions of tenant fee legislation. Always check the specific rules for your country before agreeing to pay any fees.
Understanding your rights around application fees and holding deposits can help you avoid unfair charges and make the rental applications process smoother. If you need more information, consult the Tenant Fees Act 2019 or seek advice from a reputable housing charity.
When and How Holding Deposits Are Used
A holding deposit is usually requested by a landlord or letting agent after you’ve found a property you want to rent and before you sign the tenancy agreement. This step typically comes after you’ve viewed the property and made it clear you’d like to move forward, but before all the paperwork is completed. If you’re unsure where this fits into the process, our guide on how to apply for a rental explains each stage in detail.
By paying a holding deposit, you’re asking the landlord to take the property off the market while your references and background checks are carried out. It shows you’re serious about renting the property. In return, the landlord agrees not to accept another applicant during this period.
The law sets a clear time limit for how long a holding deposit can be held. Under the Tenant Fees Act 2019, once the holding deposit is paid, the landlord or letting agent has 15 calendar days to decide whether to grant you the tenancy. This is sometimes called the “decision deadline.” You and the landlord can agree in writing to extend this period if more time is needed for reference checks or paperwork.
If the tenancy goes ahead: The holding deposit must either be returned to you or put towards your first month’s rent or tenancy deposit. The landlord or agent should make it clear how this will be handled.
If the application is rejected: If the landlord decides not to rent to you (for example, if you fail a reference check and this wasn’t due to misleading information), you are entitled to a full refund of the holding deposit.
You must receive a full refund of your holding deposit if:
The landlord decides not to proceed with the tenancy for reasons not related to misleading or incomplete information from you.
The “decision deadline” passes (the 15 days, or longer if agreed in writing) and neither party has entered into a tenancy agreement.
The landlord or agent withdraws from the agreement.
Refunds should be made within 7 days of the decision not to proceed or the deadline being reached.
There are only a few situations where a landlord or letting agent is allowed to keep your holding deposit:
You provide false or misleading information: For example, if you lie about your income or employment status.
You fail a “right to rent” check: If you don’t have the legal right to rent property in the UK.
You withdraw your application: If you change your mind and decide not to go ahead.
You don’t take reasonable steps to enter into the tenancy: For example, if you delay responding to requests for information or fail to sign the tenancy agreement within the deadline.
Landlords must give you a written explanation if they decide to keep your holding deposit, stating exactly why it is being withheld.
Understanding when and how holding deposits are used can help you avoid confusion and protect your rights during the rental process. If you’re ever unsure, check what you’ve agreed in writing and ask the landlord or agent for clarification.
Your Rights Regarding Application Fees and Holding Deposits
When you apply to rent a property in the UK, it’s important to understand your rights around application fees and holding deposits. The law offers strong protections to make sure you’re treated fairly during the application process.
By law, landlords and letting agents must give you clear, upfront information about any fees you may be asked to pay before you hand over any money. This includes telling you exactly what the fee covers and whether it is refundable. Since the introduction of the Tenant Fees Act 2019, most fees for tenants in England have been banned. The only payments you can usually be asked for are rent, a refundable holding deposit (capped at one week’s rent), a refundable tenancy deposit, and a few specific charges (like replacing lost keys or paying late rent).
If you pay a holding deposit to reserve a property, you have the right to get it back if the landlord decides not to go ahead with the tenancy, or if your application is unsuccessful for reasons outside your control. The landlord or agent must return your holding deposit within seven days of their decision not to proceed. However, if you decide not to take the property, or if you provided false or misleading information, the landlord may be allowed to keep the deposit. Always ask for the reason in writing if your deposit is withheld.
The Tenant Fees Act 2019 makes it illegal for landlords and letting agents to charge most upfront fees to tenants in England. If you are asked to pay any fee that isn’t specifically allowed under the law, it is considered an unfair or illegal fee (see Shelter’s guide for details). Examples of banned fees include charges for viewing a property, admin fees, or charges for drawing up a tenancy agreement.
If you believe you’ve been charged an unlawful fee, ask the landlord or letting agent for a refund and refer them to the Tenant Fees Act 2019. If they refuse, you can report them to your local council’s trading standards team, who have the power to investigate and fine landlords or agents who break the law. Keep records of all payments and communications in case you need to make a complaint.
You don’t have to deal with these issues alone. If you’re struggling with fees, deposits, or rent, you may be eligible for help with paying rent or housing assistance. For more detailed information about your rights and how to challenge unfair practices, visit trusted sources like Shelter or Citizens Advice. Remember, knowing your rights is the first step to protecting yourself when renting a home.
How Application Fees and Holding Deposits Affect Your Rental Application
When you’re searching for a new home to rent, understanding how application fees and holding deposits affect your rental application is essential. These payments can influence whether you secure the property you want and what happens if things don’t go as planned.
Since the introduction of the Tenant Fees Act 2019 in England (and similar rules in Wales and Scotland), most upfront fees for tenants have been banned. Landlords and letting agents can no longer charge you for things like viewing a property, setting up a tenancy, or conducting credit checks. The only permitted upfront payment is usually a holding deposit, alongside your rent and tenancy deposit.
However, there are still some costs that can arise during the application process. For example, if you request a change to the tenancy after it’s signed, or if you lose your keys, you may be charged a reasonable fee. It’s important to check what is and isn’t allowed before you pay anything.
A holding deposit is a payment you make to reserve a property while the landlord or agent carries out checks and prepares the tenancy agreement. Legally, this deposit is capped at one week’s rent. Once you pay the holding deposit, the landlord or agent should stop advertising the property and not accept applications from other potential tenants.
Paying a holding deposit shows you’re serious about renting the property, but it’s not a guarantee you’ll get it. The landlord can still refuse your application, for example, if your rental references don’t check out or if you fail a right to rent check. If your application is successful, the holding deposit is usually put towards your first month’s rent or tenancy deposit.
During the application process, landlords or agents will typically ask for rental references to check your suitability as a tenant. This might involve contacting previous landlords or employers. Under current rules, you should not be charged a separate fee for these checks.
Sometimes, you may be asked to provide a guarantor – someone who agrees to pay the rent if you can’t. Having a guarantor should not result in extra fees, but it can affect how quickly your application is processed. The landlord or agent may need to carry out additional checks on the guarantor, so make sure your guarantor is prepared with the necessary documents to avoid delays.
Before you pay any money, make sure you know exactly what you’re being charged for and why. Always ask for written confirmation of any payment and check that the fees comply with the law. If you’re unsure about any part of the process, it can help to read up on how to apply for a rental so you know what to expect at each step.
Knowing your rights around application fees and holding deposits helps protect you from unfair charges and gives you confidence as you move forward with your rental application. If your application doesn’t go ahead, you may be entitled to a refund of your holding deposit, depending on the circumstances. Always keep records of any payments and communication with the landlord or letting agent, just in case you need to challenge a decision later on.
What Happens if Things Go Wrong?
When renting a property, it’s natural to worry about what happens if things don’t go as planned – especially after you’ve paid a holding deposit or application fee. Understanding your rights can help you avoid losing money unfairly and ensure you’re treated fairly by landlords or letting agents.
If a landlord accepts your holding deposit but then decides not to go ahead with the tenancy (for example, they choose another tenant or take the property off the market), you are generally entitled to get your holding deposit back in full. Under the Tenant Fees Act 2019, landlords and letting agents cannot keep your holding deposit unless you have given them a valid reason to do so, such as providing false or misleading information.
Sometimes, your application might be turned down – for example, if you don’t pass reference checks or the landlord decides not to proceed for reasons outside your control. In these cases, the law is clear: you should have your holding deposit returned, unless you have breached the terms of the holding deposit agreement. Landlords and agents are not allowed to keep your money just because your application was unsuccessful if you have acted honestly and provided accurate information.
The Tenant Fees Act 2019 gives you strong tenant protections against unfair fees and the wrongful withholding of holding deposits. If you feel you have been treated unfairly – such as being refused a refund without good reason, or suspect you are being targeted due to race, gender, or another protected characteristic – this could be a sign of discriminatory eviction. You have the right to challenge this and seek advice or support.
If you’re worried about being treated unfairly because you’ve raised concerns, for example about property repairs, remember there are rules to protect you against being evicted for complaining or requesting repairs. These protections also extend to how fees and deposits are handled in such situations.
While the law is on your side in most cases, there are situations where you could lose your holding deposit. For example:
Withdrawing your application: If you decide not to go ahead with the tenancy after paying the holding deposit, the landlord or agent may be entitled to keep some or all of it.
Providing false or misleading information: If you give inaccurate details on your application (such as about your income or references), you risk forfeiting your deposit.
Failing to take reasonable steps: If you unreasonably delay responding to requests for information or documents, the landlord may keep the deposit.
Always read any holding deposit agreement carefully before signing, so you know under what circumstances your money could be withheld.
Knowing your rights under the Tenant Fees Act 2019 is the best way to avoid losing money unfairly. If you believe your holding deposit or application fee has been wrongly withheld, you can:
Ask the landlord or agent for a written explanation.
Contact your local council’s housing department for advice.
Seek help from a tenant support organisation.
Being informed about your rights puts you in a stronger position if things go wrong and helps ensure a fair rental process.
Additional Considerations for Renters
When planning to rent a property, it’s important to budget not only for your monthly rent but also for upfront costs like application fees and holding deposits. In England, the Tenant Fees Act 2019 limits what landlords and letting agents can charge, meaning most application fees are now banned. However, you may still be asked for a holding deposit (capped at one week’s rent) to reserve a property while your application is processed. Make sure you know exactly what you’re paying for and keep records of any payments.
Understanding these fees is just one part of managing your overall rental expenses. Alongside deposits and rent, don’t forget to consider other regular costs such as utilities and energy supply. Planning ahead for all these outgoings will help you avoid unexpected financial pressure and keep your tenancy on track.
If you’re worried about affording application fees, holding deposits, or other upfront costs, support is available. Many charities and local councils offer advice or financial assistance for renters who are struggling. If you need extra support, you can find out more about help with paying rent and related costs.
Most importantly, knowing your rights as a tenant can help you avoid common pitfalls. For example, you cannot be charged more than the legal limit for a holding deposit, and any prohibited fees should be refunded. If you feel you’ve been treated unfairly or overcharged, you have the right to challenge these charges and seek redress. Being informed and proactive will help you have a smoother and more secure rental experience.
