Student tenant tips: Holding deposit or tenancy deposit?

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Student moving homeThe new term is approaching and the nation’s students are getting ready for the big move! Like becoming a student, becoming a tenant for the first time can be daunting, fun, hard work, and extremely confusing.

Over the next few weeks we will be blogging advice for student tenants on one of the most controversial parts of renting from a private landlord – your tenancy deposit. All being well you should get your deposit money back when you leave, but whether you do or not depends on the action you take from day one, so check our blog regularly for all the advice you need on how not to lose your deposit.

First things first…your holding deposit

In this first blog we’ll take a look at holding deposits. Most students would have paid this many months ago but if you’re unclear on what a holding deposit is or still looking for somewhere to live, read this carefully.

Holding deposits are a cause of confusion for many tenants who contact us. Whilst they sound similar, holding deposits are completely different to the tenancy deposits which we protect, and the rules are different.

What’s the difference?

Holding deposits are a security against you or your landlord pulling out before you sign the agreement. It does not need to be protected in a government approved scheme.

Tenancy deposits are a security against you breaking the terms of the agreement after the tenancy begins. It must be protected with a government approved scheme within 30 days of payment.

The holding deposit is likely to be the first payment you made to your landlord or agent. By paying a holding deposit you are confirming your intention to rent the property and your landlord is confirming their intention to let it to you. If you pull out you will lose this deposit and if the landlord pulls out you should receive the deposit back.

Make sure that the property is for you before handing this deposit over and be clear on what credit and referencing checks you need to pass. If you fail the checks and as a result the landlord chooses not to let the property to you, you may also lose this deposit. 

If your holding deposit becomes a tenancy deposit

When all of the necessary checks are complete and you are ready to go ahead, rather than returning the holding deposit to you it is more common for it to be kept and used either to cover other fees, or for it to be ‘converted’ into your tenancy deposit.

If it is going to be used for your tenancy deposit, the moment it ‘converts’ from holding to tenancy deposit should be when you sign and enter into the agreement.

This is important because the landlord or agent then has 30 days by law in which to protect the tenancy deposit with one of the three schemes. Once the deposit is protected you must receive details in writing of where the deposit is protected and an information leaflet telling you how the scheme works and how to dispute any deductions when you leave. This is called prescribed information and is also a legal requirement for your landlord or agent.

But again, you must be absolutely clear if this is the case and obtain written confirmation of what is happening to your money.

If your holding deposit is kept unfairly

Your holding deposit does not need to be protected. Sadly this means that if your holding deposit is kept unfairly we are unable to offer any help. The first place to go for advice is your university or student union housing advisor.

Otherwise, use one of the following resources to seek help:

Next time….. In the next student season blog we will explain in more detail how your tenancy deposit should be protected

 

In the mean time, take a look at this video with tips for tenants on how not to lose your tenancy deposit.

 

 



Posted by Ben Beadle on 3 September 2014

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