What are Rental Application Fees and Holding Deposits?
Applying for a rental can feel expensive before you’ve even got the keys.
You might be asked for money to “reserve” the property, hear talk of checks and admin, and suddenly find yourself wondering what’s actually allowed and what isn’t. That’s usually where application fees and holding deposits come in, and the two often get muddled together even though they’re not the same thing.
Application fees used to be charged by landlords or letting agents when someone applied for a property. They were often described as covering things like reference checks, credit checks, or admin. These days, though, that’s no longer something most tenants should be paying. In England, for example, the Tenant Fees Act 2019 banned most upfront tenant fees, including application fees.
Holding deposits are different. A holding deposit is usually paid when you want the landlord or agent to take the property off the market while your application is being processed. In other words, it shows you’re serious about renting it and gives them a reason to stop offering it to other people for a short period.
That doesn’t mean they can ask for whatever they like. There are rules around how much can be charged, how long the property can be held for, and what happens to the money if the tenancy doesn’t go ahead.
That’s where people often get caught out, because a payment that seems small or routine at the time can become a problem later if you don’t know what it was for, whether it should be refunded, or whether it should have been charged at all.
In this article, we’ll look at what fees landlords and agents can legally ask for, how holding deposits work, when you should get your money back, and what you can do to protect yourself during the application process.
Legal Limits on Fees Landlords and Agents Can Charge
The law is much stricter than it used to be when it comes to what landlords and agents can charge tenants, and that’s good news if you’re applying to rent.
The main change came with the Tenant Fees Act 2019 in England, which stopped landlords and letting agents from charging most of the upfront fees that used to appear during the rental process. Before that, tenants were often asked to pay for things like referencing, credit checks, admin, or simply having an application processed. Those kinds of charges are now generally banned.
That means if someone asks you for an application fee just to apply for a property, that should ring alarm bells straight away.
Holding deposits are one of the few payments that are still allowed, but even then there’s a limit. A landlord or agent can usually only ask for up to one week’s rent as a holding deposit. So if the rent is £800 a month, they can’t just pick a number that suits them. There’s a legal cap.
There are also a few other payments that are still allowed in certain situations, like rent itself, a refundable tenancy deposit, charges for a lost key, or a fee for changing the tenancy if you’ve asked for it. But those are exceptions, and they’re still subject to rules about what’s reasonable.
The important thing is that landlords and agents don’t have free rein to add charges whenever they feel like it. If you’re being asked to pay something, it should be clear what it’s for and whether it’s actually lawful.
Your Rights Regarding Holding Deposits
Holding deposits are one of those things that can seem straightforward at first, but the detail matters.
In simple terms, a holding deposit is money paid to reserve a property while the landlord or agent finishes the checks and decides whether the tenancy is going ahead. It’s meant to pause the process, not create a loophole for someone to keep your money unfairly.
In most situations, you should get the holding deposit back if the tenancy doesn’t go ahead and it wasn’t your fault. For example, if the landlord changes their mind, takes too long, or decides to rent to someone else, you’d usually expect the money to be returned.
There are some situations where the landlord or agent may be allowed to keep it. That can happen if you gave false or misleading information during the application, failed a right to rent check, pulled out of the tenancy yourself, or simply didn’t take the steps needed to move the agreement forward.
That’s why it’s worth understanding exactly what stage the application is at and what’s expected from you once the deposit has been paid.
There are also time limits around this. If the tenancy doesn’t go ahead, the holding deposit should usually be returned within a set number of days, rather than being left hanging indefinitely while no one gives you a clear answer.
If you do go ahead and sign the tenancy, the deposit is often either refunded to you or put towards your first rent payment or tenancy deposit.
The main point is that a holding deposit isn’t supposed to disappear into the process. There are rules around it, and if those rules haven’t been followed, you may have grounds to challenge what’s happened.
Refunds and What Happens if Your Application Is Unsuccessful
If your application doesn’t go through, the first question is usually a simple one: do you get your money back? In many cases, yes.
If the landlord decides not to rent to you, changes their mind, or chooses someone else instead, you’d normally expect the holding deposit to be refunded, provided you haven’t done anything that gives them a lawful reason to keep it.
That’s where the detail matters. If your application falls through because you withdrew, gave inaccurate information, or didn’t respond when asked for documents or next steps, the landlord or agent may argue that they’re entitled to keep the deposit. But if the tenancy doesn’t happen because of a decision on their side, that’s a different story.
If you’re owed a refund, it’s usually best to ask for it in writing. Keep it simple, set out the facts, and include any dates that show what happened and when. If you’ve got emails, receipts, or messages confirming the payment and the stage the application had reached, keep hold of those too.
Sometimes the issue gets sorted quickly once you ask clearly. Other times it doesn’t.
If a landlord or agent refuses to return a holding deposit without a proper reason, you may need to challenge it more formally. That could mean making a complaint, contacting your local council, or taking steps to recover the money if it’s clear it’s been withheld unfairly.
It’s not a huge amount in every case, but it’s still your money, and it’s worth knowing when you’re entitled to it back.
How to Protect Yourself When Applying to Rent
A lot of problems around fees and deposits can be avoided before they start, simply by slowing the process down slightly and checking what you’re being asked to pay.
When you’re applying for a property, it’s worth asking early on exactly what payments are involved, what each one is for, and what happens to the money if the tenancy doesn’t go ahead. That might feel a bit awkward if you’re worried about losing the property, but it’s much better to ask before paying than try to untangle it afterwards.
It also helps to get things in writing wherever possible. If you’ve been told a holding deposit is refundable, or that it will go towards your rent, make sure that’s been confirmed clearly. If you pay anything at all, ask for a receipt.
The more pressure there is in the rental market, the easier it is for people to feel rushed into handing money over without really checking the detail. That’s often the point where bad practice slips through, because tenants don’t want to seem difficult or risk missing out.
But protecting yourself doesn’t mean being confrontational. Most of the time, it just means being clear. What is this payment for? Is it refundable? Under what circumstances would it be kept? Those are perfectly reasonable questions.
And if the answers are vague, or the person dealing with the letting process doesn’t seem able to explain them properly, that’s useful information in itself.
Related Topics to Know When Renting
Application fees and holding deposits are only one part of the rental process, and they often sit alongside other things tenants are expected to deal with at the same time.
For example, landlords may ask for references, carry out right to rent checks, or require a guarantor before agreeing to let the property. If you’re renting for the first time, or you haven’t moved in a while, it can all feel like a lot to take in at once.
There are also wider issues to be aware of, like discrimination during the application process, what happens to your tenancy deposit after you move in, and what rights you have if something feels off but you’re not quite sure why.
That’s part of the problem with rental applications generally. You’re often making quick decisions, under pressure, while trying to work out what’s normal and what isn’t.
The more you understand about the different pieces involved, the easier it becomes to spot when something doesn’t look right.
What This Means and What to Do Next
If you’re applying to rent, the main thing to remember is that not every charge is a valid one, even if it’s presented as standard.
Application fees are largely banned, holding deposits are tightly regulated, and if money has been taken from you during the rental process, you’re entitled to understand exactly what it’s for and what happens to it next.
That doesn’t mean every issue turns into a dispute. Most of the time, a bit of clarity at the start is enough to avoid problems later on.
But if something doesn’t feel right, whether that’s a fee you weren’t expecting, a holding deposit that hasn’t been returned, or terms that seem vague, it’s worth checking your position before you agree to anything else.
That small pause can save a lot of hassle later.
Looking for Help to Figure Out Your Next Steps?
If you’re not sure whether a fee or holding deposit is lawful, or you want help understanding what should happen next, Contend can help.
You can get clear guidance based on your situation, along with support for things like challenging unfair charges, understanding your rights, and working out what to say to a landlord or agent if something doesn’t add up.
It’s quick, straightforward, and designed to give you a plan you can actually follow.
Create an account now to get help with your rental application.