Is a Holding Deposit Same as a Tenancy Deposit?
You can be forgiven for getting confused over the different types of deposits involved in letting, particularly if this is your first time renting a property. So, what are they and when do they apply? This quick guide should help you find the answers:
What Is a Holding Deposit When Renting?
A holding deposit is money upfront that you give to the landlord to let him or her know you are serious about renting their flat. For their part the landlord will then take the property off the market. He or she will check your references and cannot take a holding deposit for the same property from any other prospective tenant.
When you move in that deposit – which is equal to one week’s rent – then gets put towards your rent (or your tenancy deposit) rather than going straight back in to your bank account. If, however, you decide not to go with that property then the landlord is allowed to keep the money in lieu of the fact they will have to re-advertise and find other tenants (and which means their rental property will be empty for longer).
If it is the landlord who decides that he doesn’t want to rent the property to you after you have already paid the holding deposit, then he or she must return the money without deducting fees for referencing etc.
You can find out more about the rules around Holding Deposits in the Tenant Fees Act (2019).
What Is a Tenancy Deposit?
The Tenancy Deposit (also known as a secure deposit) is five weeks’ worth of rent and which is paid at the beginning of a tenancy. This will be returned to the tenant when they move out, provided there is no reduction from the sum as the result of damage to the landlord’s property. Money can also be deducted on account of rent arrears or other fees, such as cleaning, and which are mentioned in the tenancy agreement as an ‘optional’ fee ie you can choose to allow the landlord to hire a cleaning company, or you can clean the flat yourself, incurring no deduction from the deposit.
Meanwhile, furniture and furnishings which may have faded over the year or become a little grubby is subject to what is deemed ‘normal ‘wear and tear.’ The landlord cannot deduct money for this either.
The landlord cannot hold on to the tenant’s deposit. Instead he or she must register it with one of several accredited tenancy deposit schemes. This must be done within 30 days of receipt, and the tenant has to be notified to whom it was paid and when.
Rent in Advance
There is another cost tenants’ must usually pay before moving in to their rental property. This is usually one month’s rent in advance of their official move in date. In some cases, it can be two months’ rent, or even more. If that is the case then you shouldn’t need to pay rent again until that period has expired. If you moved into a property in August, for instance, and paid three months in advance, then you wouldn’t have to pay rent again until October.
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