/ Home & Energy

What happens when a holding deposit doesn’t hold up?

Holding deposit

A holding deposit has one job; to hold a rental property. But as Adam French, Senior Content Producer here at Which?, found out, it can be extremely frustrating when they don’t hold up their part of the bargain.

I’d been looking for a new flat for months. Going to viewings all hours of the night and day. Even fitting a swift return journey in during a lunch break. Squeezing myself into shoebox flats with 15 other prospective tenants and one grinning, swaggering letting agent.

The quality of accommodation offered at my price point varied wildly, from sleek new build pads with breathtaking views, to dishevelled hell-holes with nicotine stained walls and bathrooms that looked like they’d been installed some time in the latter 19th century, pre-rusted.

As such, anywhere nice drew intense competition with final rent offers regularly exceeding the original asking price by £100-£150. A hit my monthly budget just cannot take.

Finding a flat to call home

Then, finally my girlfriend and I found a great flat; good location, affordable at the asking price, well furnished, no mould or suspect looking wiring hanging out of the wall. And, importantly, a bathroom you could use without a having a regular tetanus booster.

We told the letting agent that we were interested. And he told us that there was a lot of interest in the property, with more viewings booked in tomorrow. We knew we had to act quick, our eyes met, and we said we’d make an offer there and then.

And then something altogether unexpected happened.

Demanding a holding deposit

The letting agent told us that to put our offer to the landlord and take the flat off the market he’d have to take £500 off us as a ‘holding deposit’.

This was the first nice flat we’d seen in weeks. We were worn down by months of flat hunting, and out of sheer desperation – and against our better judgement – we agreed and transferred the cash, which we understood was supposed to hold the property off the market for us until checks had been carried out.

Looking back this was madness, transferring £500 to someone you’ve just met, with no paperwork whatsoever. But, they know they have you over a barrel. Don’t play by their rules? Then good luck finding somewhere habitable anywhere soon.

That night, a little put out by the process, we excitedly discussed moving to our new flat.

Holding deposit hangover

But, the next morning I was on the receiving end of several missed calls and answerphone messages (I have a job, I was in a meeting…). It was the letting agent from the previous night.

He said that two other prospective tenants had also put down a £500 holding deposit the day before – a fact he must have known before we put our money down. We had paid a holding deposit that didn’t do what it said on the tin – it didn’t “hold” the property for us at all.

I was furious. The letting agent began pulling the strings and set about trying to play all parties off against each other in a bid to increase the rent offer. All the while holding £500 from each.

At this point we walked away and demanded our deposit back. A return that inexplicably took five full working days to come back into our account. All the while meaning that we couldn’t move forward with any other flats we saw, as we needed that money.

It happened again

I wish I could say this only happened once, but it happened TWICE, and with different letting agents! On the second occasion – after being burnt before – we’d had assurances that no-one else had put in a deposit, and our money would take the property off the market. We were lied to, plain and simple.

The very next day we both left work at breakneck speed for yet another viewing, both thoroughly sick of the entire ordeal, and waiting on another £500 deposit to be returned.

The third time’s the charm

The third and final time we encountered this infuriating process we immediately refused to even participate.

Paperwork and consumer protection

My colleagues and I put our heads together, knowing that this situation couldn’t be right. In the short term we’ve created an advice guide and template letter you can use to ensure you understand the terms and conditions of your holding deposit – should you find yourself in a similar situation.

Has anyone else encountered this sharp practice of paying a holding deposit, which hasn’t actually held the property for you? Have you been misled by a letting agent, claiming you’re the only party interested? Have you ever lost a holding deposit or struggled to get it returned to you? We’d love to hear from you.


I have to admit to being struck that it had to happen to a Which? staffer before anything was done. Does this mean that that Which? has not been hearing of this in the media or from subscribers?

My second feeling is the sooner Which? re-locates from central London the healthier both financially and physically staff will be.

And thirdly removing workers from London will cool the market for those forced to live there. Nurses, doctors , teachers tied to a specific site.

Lastly why is Which? not naming the names of the agents /letting agents involved. If worried about defamation cases , unlikely, a few hidden cams would provide adequate proof and a greater case. This also ties in with the other area untouched by Which? new build housing scams.

“London” just raises an emotive topic from some members as to why Which? has to maintain such a large presence there with a consequent financial impact upon its employees.

It will be interesting to see if this practice is widespread (and, if so, disappointing). I wonder if it is legal, particularly given the scrutiny letting agents fees are being subjected to.

It is very difficult to generate publicity about bad practice by dodgy dealers in the property market. The local newspapers will not touch it because their advertising revenue is at stake. The trade is notorious for its barrow-boy behaviour and people have lost their sense of disgust at their disreputable practices. Hopefully, bringing it to light here and in other responsible media will alert people, but as Adam has explained, prospective tenants are on the back foot in their relationships with letting agents and dare not upset the market manipulators as it might doom their future prospects.

I strongly agree with Patrick’s second and third points because the London property market is tailor-made for exploitation by the unscrupulous and there are few defences available other than leaving it. Companies and other organisations should do themselves and their staff a favour by preparing to go now before hiring good staff with contentment with their living arrangements becomes impossible and salaries are driven over the edge of sustainability by high rents and loan repayments.

I cannot offer any useful comment but it adds realism when Which? staff talk about their unfortunate experiences, especially familiar faces such as Adam who has provided many Conversations.

I hope that others will come along and share their stories.

I wonder what would have happened if, instead of agreeing to a deposit while the offer was being considered, Adam had said he wanted the flat, asked what rent would secure it, and then decided whether to take it or not?

I totally agree with Patrick’s comment about Which?’s location. Not only does it penalise its staff in high property or commuting, costs (one travels from Devon, I believe) but these costs will mean less of its income (subscriptions) from its Members will be available for its real work. If it needs to be in London (why?) it could have a small office with a token presence. Adam should not have had this property nightmare if he could have lived away from the capital – and all of its nitrous oxides.

Good luck with finding the place you’d like, Adam, if you’re still looking.

@afrench, thanks Adam. Glad it worked out well in the end. Duplicitous 🙁

I’m glad it’s sorted now Adam. ‘Up north’ you can buy a house for much less than it costs to rent in London, and the air is much cleaner.

The lack of actual evidence as to what the holding deposit entitled you to seems to be part of the problem. I suggest anyone in the same position records the meeting with the agent and obtains a firm commitment that the deposit will secure the property at the agreed rent. If the agent reneges on the agreement you then have evidence that you could perhaps use in the small-claims court. If the agent won’t agree to you recording them then definitely walk away.

Why not go in to the letting agent’s office and get paperwork and signed papers confirming the holding of the flat? In that case, they should be able to ensure that no “mistakes” are made.

I would sue the letting agent. They have a fiduciary duty, and they cause economic damage when tenants miss other properties due to this.

The best revenge against letting agents is to look up the owner of the property in the land registry and contact the landlord directly, and offer to pay the letting agent fees to the LL, in return for signing the lease directly. And mentioning about all the letting agent’s semi-criminal incompetence to the LL.

Martin MacDonald says:
30 June 2017

This happened to me in 2008, I paid £250 as a ‘Holding Deposit’ & the landlady gave the flat to someone else!! I managed to get the full deposit back thank God, from the letting agents, but it was still very upsetting though, as I was all packed & ready to move in, on the very morning I found out the flat had gone to someone else!!!

Kate says:
1 June 2021

Happened to me, still upset about it, and I still feel she should legally pay for the emotional distress she caused me.

Pino says:
30 June 2017

Until and unless a system whereby the seller/landlord once deposit is paid cannot go back on his word/promise unless he/she is compelled to pay back to the potential buyer/tenant double the deposit received (a system that I believe exists in Scotland and all over Europe), this kind of incident will carry on happening.

Paul Thomas says:
30 June 2017

Hi, I’ve been living in the same studio for over 5 years but now I need somewhere bigger. I know how extortionate estate & letting agents in London are and their shameful reputation is mostly well-earned, but even so I was astounded to see how many fees were applied to the first place I looked at:
Pricing Information
This property is marketed by Castle Residential, Hanwell at £1,250 per month. Rightmove has calculated the price per week for comparison purposes only.
The method we use for calculating the weekly price is: (monthly price x 12) / 52, rounded to the nearest pound.

Letting fees information
The asking rent does not include letting fees. Depending on your circumstances and
the property you select, the letting agent may also apply the following upfront fees:
general administration fees
reference fees (including credit checks, bank, guarantor, previous landlord, etc)
application fees
fees for drawing up tenancy agreements
inventory fees, including check-in and check-out fees

That’s FIVE separate fees!

A new Tenants Fees Bill was announced in the Queen’s Speech last week, Paul. This will mean that letting agents will no longer be able to charge fees directly to tenants; they will have to be met by the landlord as a business expense. Clearly there is every likelihood that such expenditure will find its way back into rent levels, but two things will mitigate that: (a) there is almost certainly a mark-up on the costs of certain services such as reference checks and drawing up tenancy agreements which landlords will not tolerate; and (b) rent levels are determined by what the property market will bear in any given district whereas fees charged to tenants are often incommensurate with the cost of providing the service.

The property trade is not happy, which probably means it is the right policy. I read that according to research carried out by Capital Economics for ARLA Propertymark [a major landlord trade body] “referencing checks undertaken by agents take, on average, eight hours to complete”. I suspect that Parkinson’s Law applies – that work expands to fill the time available for its completion. I guess that most prospective tenants have a track record, and might already be on the letting agent’s books, and that on-line reference checks are sufficient in the vast majority of cases and can be executed very quickly. I also guess that “drawing up a tenancy agreement or lease” is a case of printing off a standard copy and inserting some personal details and dates.

Tenants have no choice in the letting agent they need to deal with since that is determined by the landlord’s selection and appointment; this makes it easy to take advantage of the prospective tenant, whereas landlords have full freedom of choice over which letting agent they use and can rebuff excessive charges by going elsewhere. I think any increase in rentals will be marginal and that tenants will be better off overall. It has been argued that tenants who stay put for long terms will suffer as the averaging of landlords’ expenses over their entire portfolio will bear least on the frequent mover, but I think that is a desperate argument from the trade and will be imperceptible in practice.

Good and helpful information. JW

I do like Pinto’s suggestion that taking a deposit and then letting to someone else means the disappointed potential renter receives deposit plus 100% back. When this Conversation topic was last aired I suggested that a mandatory banking of the deposit took place so that all details could be tracked and the money held in escrow.

This happened to us in Dagenham,Essex in 2014. We had found a house and as usual, the viewing involved other prospective tenants to pile even more pressure on.Anyway, we raced (lol) to the ‘estate agent’s’ office to pay the holding deposit and yes we completed all the paperwork (as suggested above by a commentator). We also paid reference fees, all in all over £600. Then the cat and mouse games began. They actually stopped taking our calls. I had to physically visit their offices after work a couple of days later only to be told by another agent (the one that took our money/completed ppw was ‘not in’) that the house was gone. I was furious as we had given notice and had two little children etc. Anyway, then it’s time to get refunded. That took some time and then the reference fees were not returned!!(they had not done any checks) I was fuming. Called and called, then fired off 2 letters. Nothing. Finally, I wrote another letter threatening to take them to the small claims court and that worked.IMO, these ‘rogue’ agents are using this cash to run their business and keep afloat. It’s disgusting and exploitative and leaves people in a very bad position as you have to wait to get that money back before you can secure something else in most cases. Needless to say, I convinced the husband to move out of London and we bought a 3-bed,3-toilet,1-garage house in Nott’shire for £154,995.Like another post up there, I agree that more people should consider moving out of London but MOST IMPORTANTLY, people need greater protection from these people and they should get penalised for this type of behaviour.I tried to check if they had any regulatory bodies for estate agents so I could report them both during and after, but nothing.It’s just plain disgusting.

There is an arrogant and exploitative element in the property trade that just will not go away. Good agents, who honour the traditional code of “My word is my bond”, are fed up with it because it constantly drags them down to the barrow-boy level. They seem incapable of creating a recognised and effective regulatory regime for the letting trade, and there is probably little likelihood of statutory regulation of estate agents and lettings businesses which are a blot on professional commerce. There are several professional organisations that represent estate agents and have codes of conduct and disciplinary measures but many agents are outside those schemes. There is also a Property Ombudsman for resolving disputes with estate and letting agents, but again membership is not compulsory. The proposed new legislation on tenants’ fees I referred to above will help create a more level playing field in the future but it will not tackle the problems that many people have commented on here of agents playing games with deposits, so tenants will remain on the back foot wherever there is strong competition to rent a property.

I am glad you were able to get onto the home-ownership ladder, Funke, and have found a good house in a nice county at a very reasonable price.

My son and three other students were persuaded to part with £1400 reservation fee to hold a property after being assured that it would be returned if the landlord changed his mind. This was after being asked to stump up £20 more per week in rent as other prospective tenants had offered more. A month later whilst waiting for the tenancy agreement to come through, the letting agent contacted them to say that the landlord now wanted £10 more per week in rent as he wanted to recoup his decorating costs! The students refused and asked for their reservation fee to be returned which they were assured would be as the landlord was adamant that he would not accept anything less. Despite the agent setting up new viewings for them which gave them further reassurance that they were no longer bound to this property and the promise of the return of the fee in phone calls and texts, the money was never paid back. The property was then readvertised by the agent (which I have proof of) so clearly it was not being reserved for the students any longer. The students then found another property with another agent. When they revealed this to the letting agent he then said that the landlord was now accepting their offer and the reservation fee would not be returned. This is sharp practice on a group of young people who have no experience of renting and were naive and trusting. They also cannot afford to lose such a large sum of money. I am currently trying to help them get the money back and am waiting for the 8 weeks before I can approach the redress system which btw I had asked the letting agent for information on but which was not forthcoming. Had to do quite a bit of research to find out this information. Not sure whether the redress system is going to help get the money back but I will go all the way with this as I am fairly fed up with the amount of ripping of f going on at the moment.

I have similar history aswell. i paid last week for flat 900 pound holding deposit. i found out flat was still on the market and Agent or landlord wants money from other people.
agent told me i need to pass some reference checks. i send him all my checks and they sent me email i failed.
My 900 pound is gone for nothing what can i do ? please help

Lauren Goldsmith says:
30 January 2021

I placed a holding deposit on a property . At the door the lady said I am happy to give it to you . We went away and payed a holding deposit . Two days later we received a call to say we had passed referencing and it was just a matter of signing contracts that the estate agent was drafting up . I even called the next day for measurements and still no mention of us not getting the property , it came to Friday a week after we had put the holding deposit down so I just called the office for a update my the estate agent I was dealing with had just left the office so I was passed over to a lady . She said have they not spoken to you we had a open day on Thursday we have sent your money back he should of called you . When questioned she got herself in a fluster and said oh maybe I have the wrong property the estate agent you spoke to previously will give you all call . Surely this is not allowed

Lauren – Perhaps there was a mistake. Did you get a call from the person you had been dealing with? Have you lost the property? Did you get any paperwork after paying the ‘holding deposit’? The answer to your question depends on what terms and conditions applied to the arrangement you made with the estate agent’s first representative.