What is the difference between a holding deposit and a security deposit?
A holding deposit is different from a security deposit, as it is payable before a tenancy is entered into. A holding deposit is typically paid to reserve the property while a security deposit is a payment from tenants to cover any damages to the property during the course of the tenancy. A security deposit, unlike a holding deposit, needs to be registered in a government-approved deposit protection scheme. Where a letting agent takes a holding deposit on behalf of a landlord, the deposit must be protected through membership of a client money protection scheme. Under this initial holding deposit form, the holding deposit forms part of the security deposit, if a Tenancy agreement is entered into. This deposit will then need to be protected in a deposit protection scheme.