Posted in Blog  
  on Feb 02, 2014

How to Determine a Landlord Holding Deposit

How To Determine A Landlord Holding Deposit

A landlord holding deposit is an amount of money that a tenant pays to a landlord to keep a unit or property reserved for him or her till such time he or she actually moves in. A holding deposit is not a security deposit. It is also not the same as signing an agreement and becoming a tenant and then moving in at a later date because the prospective tenant doesn’t start paying rent straightaway. A holding deposit is simply an amount of money that a tenant pays to a landlord to take the unit or property off the market. It is so done because a tenant may not always be ready to move in immediately and might need some time. Also, the tenant doesn’t want to miss out on renting a property and that is why the deposit is paid as a promise that the tenant would be moving in.

When to Determine a Holding Deposit

The holding deposit should be determined on a case to case basis. A tenant might want a period of seven days, fortnight, a month or several weeks before he or she could confirm to the landlord that they would indeed be signing the agreement and moving in as tenants. If a unit or property is held up and reserved for a month and then a tenant doesn’t move in then a landlord loses one month’s potential rent because that is what the landlord would have got had the property been rented and not taken off the market. A holding deposit is thus determined based on the demand of the tenant or the need of the situation.

A holding deposit is usually adjusted with the first rent or with the security deposit and seldom returned. Should a prospective tenant who has been screened and made a promise of moving in decide not to move in then the holding deposit is not refunded.

A holding deposit should be determined based on the time a prospective tenant is asking for, the reason, the demand of the property and the discretion of the landlord. A property that is in huge demand and a tenant might be ready to move in straight away would require a holding deposit that may be equal to a month’s rent or more because the landlord would be losing out on a month’s rent or more should the prospective tenant eventually decide against signing the agreement and moving in.


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