Has Holding Deposit turned into Security Deposit?

Hi Angela,

I am with you on this one, but willing as ever to be proved wrong 🙂

A holding bond is a holding bond until the lease is signed. Then I am sure It has to be returned or becomes all or part of the monies in the agreement and subject to 30 days lodging timescale.as at date of lease as that would be the point a contract is in effect. Otherwise the holding bond is an amount that can be tapped into for losses the landlord has occurred in readvertiising / viewings if there is no follow through from the prospective tenant. Loss would have to be proven.

If you have lodged it with DPS, I would think that shows your intention to hold the room for her, and IF you stopped marketing it thus lost a month's rent, it should be forfeited to you. Ask the DPS, if they are certain it can't be returned to you, then ask her for the money, or advise her small claims proceedings will follow. That should make her pay all or some to you.

My agent applies a non-refundable holding deposit of £100. So £400 would seem a bit steep for you to retain, also you would need to have specifically told her that it was non-refundable. As a security deposit it is fully refundable as stated by previous comments.

Look to the contract. My understanding is that it cannot be treated as a Security Deposit in the absence of a lease, there never was any statutory requirement on you to protect the deposit until such time as it's status actually changed and I don't understand how it could have been properly registered in the absence of a start date. Again, both the quantum of and right to retain a holding a deposit will/should be stated in your pre-contract paperwork.

Reply to the comment left by "money manager" at "21/12/2015 - 10:22":

Yup - sounds right to me

I have holding deposit paperwork .I get this signed so we all know where we stand.2 months is a long time to be messed around and with my document I would of kept all deposit for my losses.
Holding deposit doesn't have to be protected.

Reply to the comment left by "Asif Ahmed" at "19/12/2015 - 15:37":

I agree with Asif. Deposit protection is only required for an AST - all other types of letting agreement are exempt.

However, an AST can be created on a verbal contract, and the OP states she had agreed for the tenant to move in. Therefore, unless the OP had made it very clear to the prospective tenant that no contract was to be created until the AST was signed by both parties (ideally by using the phrase "subject to contract" in communications), the tenant may be able to argue that an AST was created.

Reply to the comment left by "Mandy Thomson" at "21/12/2015 - 11:00":

True, however by expressing an intent NOT to move in the tenant is either confirming a belief that no tenancy was created or, even better perhaps, is requesting an early release. If the former persists the deposit should be retainable as a cancelled holding deposit and if the former for agreeing to that early release. If the contratc had actually been written the, propspectie, tenant would have had no right of early exit and a liabilty for unelapsed rent i.e. thousands.

It seems to me that despite the nuances, your first line should be to try to claim from the DPS. And I would suggest not raising the fact that at at one point it was a holding deposit.

My understanding is that a contract does not need to be in writing, and is not invalidated by the fact that one or both parties are able to cancel at any time.

However you word it to the DPS, you have a claim against the deposit lodged (the 1st month's rent was still due even though the contract was cancelled), or you suffered damages (the property was off market for at least a month).