Enforcing a Holding Deposit Agreement

Prospective tenants in England are often asked to put down a holding deposit as a condition of signing a tenancy agreement. A holding deposit is an up-front payment given to the landlord or the landlord’s agent to place a “hold” on the property from being rented to anyone else while the applicant’s references are checked. It is paid after the key terms of the tenancy (for example, the rent amount and move-in date) have been agreed. Its purpose is to give both parties peace-of-mind that the applicant is “locked in” to renting the property.

In a previous contribution to the Landlord and Tenant Review, I described how the payment of a holding deposit is improperly used by some landlords as leverage for “renegotiating” the terms of the tenancy prior to handing over the keys. The inspiration for that article came from my own experience as a tenant and from discussions with fellow lawyers living in London. Last year, I put my rent where my mouth was: I sued my former landlord. For the benefit of tenants and landlords who find themselves in a similar predicament, I offer some brief reflections on my experience.