The following are some queries we have received from members about holding deposits, tenancy deposits and other fees.
- Can I ask a tenant to pay for gardening services?
No. You cannot require a tenant to pay for gardening unless this has been included as part of the rent.
- If a tenant paid a tenancy deposit which exceeds the cap before 1st June 2019, do I need to re-pay the amount of the deposit above the cap?
No. Landlords and letting agents are not obliged to immediately refund part of a tenancy deposit that is above the cap but was paid before 1st June 2019. There is a 12 month transition period from 1st June 2019 to 31st May 2020. This is to allow time for landlords and letting agents to renegotiate their agreements. From 1st June 2019, any provision which breaches the ban in a continuing tenancy agreement which was signed before this date continues to be legally binding on the tenant.
- What happens after the transition period?
From 1st June 2020, any provision in continuing tenancies that breach the fee ban or deposit cap will no longer be legally binding. This includes continuing assured shorthold tenancies, tenancies of student accommodation, licenses to occupy housing signed before 1st June 2019 and statutory periodic tenancy agreements arising during the transitional period from a fixed term signed before 1st June 2019. A landlord or agent does not need to immediately return any part of the deposit which is in excess of the cap, (as this payment was not made after the cap came into force). However, you will be required to refund the excess deposit at the end of the tenancy in the usual way and any new tenancy agreed after this will need to comply with the new tenancy deposit cap.
Holding Deposits
A landlord can take a holding deposit, maximum equivalent to 1 weeks rent. Landlords will usually have two weeks, (14 days), to enter into a tenancy agreement with a tenant once a holding deposit has been received by the landlord or agent. However, you may agree a different ‘deadline for agreement’ with the tenant in writing, which could be more or less than 14 days.
You should provide a tenant with clear information that sets out:
- the amount of deposit they have paid
- the agreed rent for the property
- the specified date for reaching an agreement (‘the deadline for agreement’)
- other material agreed terms you will be letting the property on
A holding deposit can only be retained where a tenant:
- provides false or misleading information which you can reasonably consider when deciding to let a property – this can include a tenant’s behaviour in providing false or misleading information
- fails a right to rent check
- withdraws from a property
- fails to take all reasonable steps to enter into a tenancy agreement and the landlord or agent takes all reasonable steps to do so. You must set out in writing why you are retaining a tenant’s holding deposit within 7 days of deciding not to let to them.