UK Landlord Forum / Life

Is it ok to ask for a 'holding deposit' from the prospective tenants once the credit checks are done?. This is to ensure that the tenants are serious about taking the house and i can stop marketing it. It would be non-refundable in the event that they 'pulled out' but if they go ahead would be put towards the main deposit (and obviously become completely refundable). As the house is empty at the moment I would feel more secure knowing the mortgage will at least be paid while waiting a month for the tenants to finish their current tenancy. Has anyone else done this??

I've not done it personally but the principal seems sound enough.  I wouldn't tie it in with the deposit though as with the strict deposit protection timescales you could come a cropper.  Id be more comfortable non refundable then refunded in full.

I wouldn't be comfortable taking a holding deposit and be using it to pay the mortgage, if I read correctly what was implied?

Happy to concede I'm thick but I don't understand the statement about the mortgage being paid if OP takes a holding deposit 
If the tenant moves in a month later the holding deposit either gets returned or converted into part of the rental deposit....
So you end up with a void period and no mortgage payment... I do understand having money in your hand is a good thing if they decide not to move in.

Anyways just make sure you have an agreement drafted up to make it 100% clear how the holding deposit will be handled in the scenario the prospective doesn't move in.  There are a few templates to be found on the Internet and most are rubbish so beware....a simple check is to see if the scenario of the tenant failing the credit check is covered in the agreement because technically that is the Landlord electing to not complete the deal...

Best of luck.

I have done this for a few years now.  A small Holding fee that takes the ad down and shows the potential occupant to be serious.  I initiated this when I had "shaken hands" with a prospective tenant.  I removed the ad and thought everything was going forward, just waiting on checks, references etc.  They rang and said they were going to a second view somewhere else.  I was livid,     they were still viewing other places despite what I considered a verbal agreement!  I verbally cancelled, put the ad back up and subsequently have insisted on a Holding fee before I remove the ad.  The holding fee becomes a part of the deposit and all is returned subject to the usual check out requirements. 

One potential occupant paid her holding fee and went skiing before she moved in, still had about two weeks notice on her part and two weeks for my current to vacate. She had a terrible accident requiring her mother to fly to Switzerland and ship her back to Australia. She apologised profusely  knowing I had to re advertise, but later emailed me to say her insurance refunded her Holding fee as I had given her a receipt.  No monetary loss on her part.  Only one lad lost his Holding fee as he wasn't ready to come to London at that particular time.  Weirdly he contacted me 12 months later and yes I took him without charging another Holding fee! 

Quote from: Ladybug on May 13, 2016, 03:54:10 PMThe holding fee becomes a part of the deposit and all is returned subject to the usual check out requirements.

How does that work, say, if you took the holding deposit on 11 May 2016 but the tenancy commencement date wasn't until 30 Jun 2016 and the rest of the deposit was to be paid just prior to that? You would be over the 30 day limit for protection and be exposing yourself unnecessarily? Is there a way around it?

What the law says around a holding deposit is that you just need to protect it once it becomes a security deposit. You have 30 days to secure a security deposit from the day the payment was made (not cleared in the landlord's/agent's account).

My interpretation of this is that once one receives the rest of the deposit than the holding deposit becomes the security one?

Also, the best practice is to provide the tenant with a document describing the terms of this holding deposit. (i.e. holding deposit takes the property off the market and is not refundable, becomes security deposit once rest of funds received, etc,..)