Holding Deposit One-Week Cap: How Much Can a Landlord Legally Take?

The holding deposit one week cap is one of the simplest rules in English lettings law to state, and one of the easiest to get wrong in practice. Since the Tenant Fees Act 2019 came into force, a landlord or agent in England cannot take a holding deposit worth more than one week’s rent. Charge a penny more and the entire payment becomes a prohibited payment, exposing you to a financial penalty of up to £5,000 for a first offence (and up to £30,000, or a criminal prosecution, for a repeat breach within five years).

This guide shows you exactly how to calculate the one-week holding deposit cap, the rounding error that catches landlords out, the strict repayment timetable, and how the rule sits alongside the wider deposit framework that survived the Renters’ Rights Act 2025. It is written for England, accurate to the law in force on 18 June 2026.

What the one-week holding deposit cap actually means

A holding deposit is a payment a prospective tenant makes to “reserve” a property while you carry out referencing and Right to Rent checks. It is not the same thing as the security deposit you take at the start of the tenancy, and it is governed by a different statute. Under section 1 and Schedule 1 of the Tenant Fees Act 2019, a holding deposit is a permitted payment, but only up to a strict ceiling:

• The maximum is one week’s rent.
• “Rent” here means the annual rent agreed for that tenancy, divided down to a weekly figure (the Act sets the formula precisely, see below).
• You may only hold one holding deposit per property at any one time.
• A holding deposit can only ever be taken in connection with a tenancy that has not yet been entered into. It is a reservation payment, nothing more.

The Tenant Fees Act 2019 applies to assured tenancies and licences in England, and the Renters’ Rights Act 2025 (in force from 1 May 2026) did not change the holding deposit cap. Every assured tenancy is now a periodic assured tenancy, fixed-term assured shorthold tenancies are gone, but the one-week ceiling, the calculation method and the repayment rules are unchanged. If you want the full picture of what stayed and what changed, see our Renters’ Rights Act 2025 explained guide.

Why the cap exists at all

Before 1 June 2019, agents and landlords routinely charged inflated “reservation fees”, “admin fees” and the like, and pocketed them whether or not the tenancy went ahead. The Tenant Fees Act swept almost all of these away. The holding deposit is one of the few payments that survived, precisely because it serves a legitimate purpose: it gives the landlord some protection against a time-waster who pulls out after referencing has already cost money. Parliament’s price for keeping it was the hard one-week ceiling and a tightly policed repayment regime.

How to calculate one week’s rent (the formula that matters)

This is where most mistakes happen. The legal formula in the Tenant Fees Act is not “monthly rent divided by four”, and it is not “monthly rent divided by 4.33”. It is set out expressly in the Act:

Weekly rent = (monthly rent × 12) ÷ 52

Then round down to the nearest penny. Rounding up, even by a single penny, can technically tip you over the cap, and because the penalty bites on the whole payment, that single penny is genuinely dangerous.

If rent is quoted weekly, the weekly figure is simply the weekly rent. If it is quoted annually, divide by 52. The safest universal approach is always to derive the annual figure first, then divide by 52.

Worked example

Say the agreed rent is £1,000 per calendar month:

• Annual rent: £1,000 × 12 = £12,000
• Weekly rent: £12,000 ÷ 52 = £230.769…
• Maximum holding deposit: £230.76 (rounded down)

If you instead did £1,000 ÷ 4 = £250, you would be £19.24 over the cap, and the whole £250 becomes a prohibited payment, not just the £19.24 excess. The tenant could recover the lot, and you could face a penalty on top.

A second, trickier worked example. The rent is £675 per calendar month and the applicant offers to pay “a week’s deposit, call it £170” to take the flat off the market on a Friday afternoon:

• Annual rent: £675 × 12 = £8,100
• Weekly rent: £8,100 ÷ 52 = £155.769…
• Maximum holding deposit: £155.76

Accepting £170 because it “sounds about right” overshoots by £14.24 and converts the entire payment into a prohibited payment. The fix is trivial, do the arithmetic before you accept anything, but the consequence of skipping it is not.

Quick reference table

Notice that in every row the “divide by four” shortcut would overshoot. A £1,500 monthly rent divided by four gives £375, nearly £29 over the lawful £346.15 ceiling. The error is systematic, not occasional, which is why so many penalties trace back to it.

When you must repay the holding deposit

Taking the right amount is only half the job. The Tenant Fees Act sets a strict timetable for what happens to the money next, and missing it is a breach in its own right. By default you must either:

• Apply it towards the first month’s rent or the tenancy deposit, but only with the tenant’s written consent; or
• Repay it in full within 7 days of the relevant trigger.

The triggers for the 7-day repayment clock are:

1. The tenancy is entered into (and you and the tenant have not agreed in writing to put the holding deposit towards the rent or deposit);
2. The landlord decides not to proceed, or the parties otherwise agree not to enter into the tenancy; or
3. The “deadline for agreement” passes without a tenancy being entered into. The deadline for agreement is the 15th day after the day on which the holding deposit was received, unless landlord and tenant agree a different date in writing.

So if a tenant pays a holding deposit on 1 July and nothing is signed, the deadline for agreement is 16 July, and you must repay by 23 July at the latest.

The limited grounds for keeping it

You can only keep a holding deposit in a short, closed list of circumstances:

• The tenant provides false or misleading information that the landlord is reasonably entitled to consider in deciding whether to let (for example, a fabricated employment reference);
• The tenant fails a Right to Rent check and the landlord did not know, and could not reasonably have known, this before accepting the deposit;
• The tenant withdraws from the proposed tenancy; or
• The tenant fails to take all reasonable steps to enter into the tenancy (for example, ghosting referencing requests) when the landlord and agent are doing the same.

Even where one of these applies, you must give the tenant written reasons for retaining the deposit, within 7 days of deciding not to proceed (or of the deadline for agreement). No written reasons, no lawful retention, even if the underlying ground was genuine.

The mistakes that turn a holding deposit into a fine

• Wrong formula. Dividing monthly rent by 4 (or by 4.33) instead of using × 12 ÷ 52. This single error accounts for a large share of penalties.
• Rounding up. Always round the penny figure down. £230.77 is over the cap when £230.76 is the lawful maximum.
• Taking more than one. You cannot hold reservation payments from two applicants for the same property simultaneously. Pick one applicant, take one deposit.
• No written reasons. If you retain the deposit, the tenant must be told why, in writing, within the statutory deadline.
• Missing the repayment window. The 7-day repayment deadlines, and the 15-day deadline for agreement, are hard limits, diarise them the moment money arrives.
• Treating it as a fee. A holding deposit is refundable by default. It is not an “admin charge” you can simply absorb because referencing took your time.

Because the penalty applies to the whole payment, not just the overcharge, an error of a few pounds can cost thousands. The enforcement authority is the local trading standards / district council, and tenants can also recover prohibited payments through the First-tier Tribunal. This is a textbook Your-Money-or-Your-Life (YMYL) area where precision pays, for the full enforcement picture, see our landlord fines in England 2026 guide.

Holding deposit vs tenancy deposit: a side-by-side

The one-week holding deposit cap sits alongside the separate (and larger) tenancy deposit you take at the start of the let. They are governed by different statutes, have different caps, and serve different purposes. Confusing the two is a common cause of error.

For the bigger picture on the security deposit, read Tenancy Deposit Protection in England Explained and our guide on how much a landlord can charge as a deposit. When you do take a holding deposit, issue a proper receipt, our holding deposit receipt template guide sets out exactly what to include. And for everything around permitted payments and the wider Tenant Fees Act framework, start with Holding Deposits Explained.

A short worked process from offer to move-in

1. Agree the rent with the applicant (say £1,200 pcm).
2. Calculate the cap before taking anything: £1,200 × 12 ÷ 52 = £276.923, so the maximum holding deposit is £276.92.
3. Take no more than that figure, and issue a written receipt recording the amount, the property, the date received, the deadline for agreement and the grounds on which it could be retained.
4. Run referencing and Right to Rent checks promptly, the clock is ticking towards the 15th-day deadline for agreement.
5. If the let proceeds, get the tenant’s written consent to apply the holding deposit towards the first rent or the security deposit. If you don’t get consent, repay it within 7 days of the tenancy starting.
6. If the let does not proceed and no retention ground applies, repay in full within 7 days of the deadline for agreement.
7. If you are retaining it on a lawful ground, send written reasons within 7 days.

That seven-step discipline is the whole compliance picture in one place. The arithmetic at step two is the part that quietly sinks landlords.

Where to check the rules yourself

Always verify against primary sources before you take any payment:

• The Tenant Fees Act 2019 on legislation.gov.uk, see section 1 and Schedule 1 for permitted payments and the holding deposit definition and timetable.
• GOV.UK guidance on the Tenant Fees Act for landlords and agents for the calculation method and worked examples.

If anything about a specific payment is unclear, get advice from a solicitor before you accept it, the cost of a mistake far outweighs the cost of checking.

Frequently asked questions

How much is the maximum holding deposit on a £900 per month flat?

Work it out with the statutory formula: £900 × 12 = £10,800; £10,800 ÷ 52 = £207.692…; rounded down, the maximum holding deposit is £207.69. Never use £900 ÷ 4 = £225, that overshoots by more than £17 and turns the whole payment into a prohibited payment.

Did the Renters’ Rights Act 2025 change the one-week cap?

No. The Renters’ Rights Act 2025 reformed tenancy structures (abolishing fixed terms and Section 21) and the rent-increase and pets regimes, but it left the Tenant Fees Act 2019 holding deposit rules, including the one-week cap, the 15-day deadline for agreement and the 7-day repayment windows, completely intact.

Can I keep the holding deposit if the tenant changes their mind?

Yes, in principle, withdrawal by the tenant is one of the limited grounds for retention. But you must still give the tenant written reasons for keeping it within 7 days, and you cannot keep more than the lawful one-week amount you took in the first place. If the tenant withdrew because you or your agent imposed an unreasonable requirement, retention may not be lawful.

What happens if I accidentally take a few pounds too much?

The penalty applies to the entire holding deposit, not just the excess. A trading standards / district council enforcement authority can impose a financial penalty of up to £5,000 for a first breach, and the tenant can recover the whole payment. There is no “rounding tolerance”, the safe figure is the formula figure rounded down to the penny.

Can I take a holding deposit from two applicants to be safe?

No. You may only hold one holding deposit per property at a time. Taking reservation payments from two applicants for the same property is itself a breach. Choose one applicant, take a single compliant holding deposit, and proceed.

Is a holding deposit the same as the first month’s rent?

No. They are separate payments. A holding deposit can be applied towards the first month’s rent or the security deposit, but only with the tenant’s written consent once the tenancy proceeds. Until then it is a refundable reservation payment subject to the one-week cap and the statutory repayment timetable.

Coming soon

Tenancy Pilot is launching soon. Its holding deposit tool will calculate the one-week cap for you automatically, enter the monthly rent, and it derives the correct × 12 ÷ 52 figure, rounds down to the penny, and generates a Tenant Fees Act-compliant holding deposit agreement and receipt with the deadline for agreement and the 7-day repayment windows logged on your dashboard with deadline alerts. No more division-by-four errors, no more missed deadlines.

Want to take holding deposits without the maths and the fine risk? Join the waitlist to be first in when we launch.

This article is general information, not legal advice. Rules change and individual circumstances vary, always check the current position on GOV.UK and legislation.gov.uk, and consult a qualified solicitor before acting.