Holding deposits explained: how to secure a booking before the lease is signed
A holding deposit — sometimes called a holding fee — is a small, usually refundable payment that takes a rental property off the market while references, right-to-rent checks and the tenancy agreement are finalised. Charge it correctly and you protect your income; charge it wrong and you risk a dispute (or in some markets, a fine). Here's how to do it properly.
Why "I'll hold it for you" isn't enough
A verbal agreement to hold a property costs the landlord nothing to break — and costs the tenant nothing to walk away from. Without money changing hands, the strongest applicant can disappear the moment a better property comes up, and you're back to square one with a vacant unit and lost rent.
- Good applicants get offers from multiple landlords at once — the one who locks them in fastest wins.
- Without a holding deposit, there's no incentive for either side to follow through before contracts are signed.
- Collecting it 'informally' (bank transfer to a personal account) creates exactly the kind of paper-trail gap that leads to disputes later.
- In some jurisdictions (e.g. England, under the Tenant Fees Act 2019), holding deposits are legally capped and regulated — getting it wrong can mean repaying the tenant double.
A clear holding deposit, collected with a payment link
A holding deposit works best when it's small, clearly time-boxed, and easy to pay and refund. PayRequest lets you send a payment request for the exact holding fee, with terms attached, and track whether it converts into the security deposit, gets refunded, or — where legally permitted — gets retained if the tenant withdraws.
Set a clear amount and deadline
Define the holding fee (commonly capped at one week's rent in regulated markets) and the number of days the property stays off the market.
Collect it in minutes, not days
Send a payment link by email or SMS. The applicant pays by card or digital wallet — no bank details exchanged, no waiting for a transfer to clear.
Convert it automatically
When the lease is signed, the holding deposit converts toward the security deposit or first month's rent — track this in your PayRequest dashboard.
Refund with one click
If the application doesn't proceed (through no fault of the tenant), refund the holding deposit instantly from the same payment record.
How to collect a holding deposit, step by step
Decide the amount and put the terms in writing
Most markets treat one week's rent as a reasonable, often legally capped, holding deposit. State clearly what happens if the tenant withdraws, fails referencing, or if you withdraw the offer.
Send a payment request immediately after verbal agreement
Don't wait for a follow-up email thread — send the link while the applicant is still motivated, ideally within the hour.
Take the property off the market
Once the holding deposit is paid, pause your listings and stop other viewings — this is the applicant's main protection too.
Complete referencing and right-to-rent checks
Use the holding period (commonly 15 days under the UK Tenant Fees Act) to complete checks before signing the tenancy agreement.
Convert, refund, or (rarely) retain
On signing, apply the holding deposit toward the security deposit or first month's rent. If the application fails through no fault of the tenant, refund in full.
Holding deposit vs the other up-front payments
| Type | Typical amount | When paid | Refundable? | Purpose | Common cap |
|---|---|---|---|---|---|
| Holding deposit / fee | ≈1 week's rent | Before referencing / signing | Yes, in most cases | Reserves the property | 1 week's rent (e.g. England, Tenant Fees Act 2019) |
| Security deposit | ≈4–5 weeks' rent | Before / at move-in | Yes, at end of tenancy | Covers damage, unpaid rent | 5 weeks' rent (England, annual rent under £50k) |
| Application / admin fee | €0–50 | Before referencing | Usually no | Covers referencing costs | Banned in some markets (e.g. England) |
| First month's rent | 1 month's rent | At / before move-in | No — it's rent | Covers the first rental period | N/A |
From single lets to letting agencies
Private landlords with one or two lets
Lock in a tenant the moment they say yes, without expensive referencing software.
Letting agents managing multiple viewings
Standardise the holding fee across every listing and track which applicants have paid.
Vacation-rental hosts going long-term
Converting a short-term let to a 6–12 month tenancy? A holding deposit confirms the switch before you cancel other bookings.
Room and HMO landlords
Reserve a single room in a shared house while the rest of the tenancy agreement is finalised.
Why a payment link beats "bank details in a text message"
Sending your bank account number over WhatsApp works — until a tenant claims they never received a refund, or an applicant disputes how much they actually agreed to pay. A payment link creates a timestamped, itemised record on both sides automatically.
- Every holding deposit gets a unique, timestamped payment record — useful if a dispute ever needs evidence.
- Refunds are tracked against the original payment, so there's no 'did you actually send it back?' conversation.
- Applicants see a branded checkout, not your personal bank details — which feels (and is) more professional and secure.
- You can attach the holding deposit terms directly to the payment request, so the applicant agrees to them at the point of paying.
Frequently asked questions
What is a holding deposit?+
Is a holding deposit refundable?+
How much can a landlord charge for a holding deposit?+
What happens if the tenant withdraws after paying a holding deposit?+
Can a holding deposit be applied toward the security deposit?+
How quickly should a holding deposit be refunded?+
Lock in your next tenant before they look elsewhere
Send a holding deposit payment request in under a minute — track, convert, or refund it from one dashboard.