Holding deposit, tenancy security deposit and rental fees

Understanding Move-In Costs as a Tenant in King's Lynn, Norfolk

If you're embarking on a new tenancy in the picturesque town of King's Lynn, Norfolk, it's essential to grasp the ins and outs of deposits, rental fees, and expenses. Here at My House Online, your go-to lettings agency, we're here to simplify this often bewildering process for you. Join us as we break down the various financial aspects of starting a new tenancy, so you can move into your new home with confidence.

The Holding Deposit: A Key Step in Securing Your Property
The journey begins with the holding deposit, sometimes referred to as a holding fee. This initial payment serves as a reservation fee requested by your landlord or agent to secure the property you're interested in. Essentially, it takes the property off the market, so it's exclusively reserved for you until the references are completed.

The Tenant Fees Act (2019) governs the rules surrounding holding deposits, ensuring fairness and transparency. These deposits should only be requested once both parties have agreed on terms, including the move-in date, tenancy agreement details, rent amount, tenant information, fixed-term duration, and rental period frequency (e.g., monthly or weekly).

Crucially, if the landlord wishes to alter any of these terms after you've paid the deposit, you have the right to refuse. Should this refusal result in the tenancy not proceeding, your holding deposit must be fully refunded.

Once you've paid the holding deposit, it's understood that the tenancy is conditionally approved, pending referencing checks conducted by the landlord or agent. Importantly, they cannot charge you for these checks.

Repaying the Holding Deposit

The landlord or letting agent who received the holding deposit is required to repay it under the following circumstances:

1. The landlord and tenant successfully enter into a tenancy agreement.
2. The landlord, before the deadline for an agreement, decides not to proceed with the tenancy agreement.
3. The landlord and the tenant fail to finalize a tenancy agreement before the Deadline for Agreement.

If any of these situations apply, the holding deposit must be refunded within seven calendar days from the date of the decision or the Deadline for Agreement.

With the tenant's written consent, landlords and letting agents have the option to facilitate the repayment of the holding deposit by allowing the tenant to deduct the equivalent sum from either the first rent payment or the tenancy deposit.

Retaining the Holding Deposit

The landlord or letting agent who received the holding deposit is permitted to retain it if the tenant:

1. Fails a Right to Rent check, regardless of when the deposit was accepted.
2. Provides false or misleading information to the landlord or letting agent, information that significantly influences the landlord's decision regarding the tenant's suitability to rent the property.
3. Notifies the landlord or letting agent, before the deadline for an agreement, of their decision not to proceed with the tenancy agreement.
4. Fails to take all reasonable steps to finalise the tenancy agreement.

Important Note: False or misleading information refers to information provided by the tenant that is factually incorrect and materially affects the landlord's decision to let the property. It does not encompass the mere failure to undergo a reference check.

For instance, letting agents must be able to demonstrate that the tenant's income declaration was significantly overstated, or that the tenant provided clearly inaccurate information about their income or employment, or that the tenant failed to disclose relevant information when directly asked, such as valid County Court Judgements.

At My House Online, we prioritize transparency and adherence to legal requirements throughout the letting process, ensuring fairness and clarity for both landlords and tenants.

The Amount of a Holding Deposit
The Tenant Fees Act established a cap for holding deposits placed after June 1, 2019, limiting them to one week's rent. At My House Online, our holding deposit stands at a reasonable £100.

Understanding the Tenancy Deposit
The tenancy deposit, also known as a security deposit, marks the commencement of your tenancy. It's paid upfront and refunded to you at the tenancy's conclusion, with potential deductions for specific reasons:

Repairing property damage.
Clearing any rent arrears outstanding at the tenancy's end.
Covering permitted fees outlined in the tenancy agreement, such as replacing lost keys.
Importantly, your landlord must register the tenancy deposit with a government-approved deposit protection scheme. Within 30 days of deposit payment, they must also provide you with prescribed information, detailing the scheme used, deposit amount, and how you can dispute any proposed deductions.

How Much Is a Tenancy Deposit?
The Tenant Fees Act mandates that the tenancy deposit must not exceed five weeks' rent. For tenancies initiated before June 1, 2019, deposits exceeding this limit are prohibited, with landlords required to refund the excess amount immediately.

To determine your five weeks' rent, you can use our straightforward calculator, ensuring you're informed and within the legal bounds.

Deductions from a Tenancy Deposit
Landlords may make deductions from your tenancy deposit for outstanding rent or missing items within a furnished property. Crucially, deductions cannot be made for normal wear and tear. While there's no precise definition for wear and tear, responsible use of the property and its furnishings should not incur additional charges. For a comprehensive guide on wear and tear, refer to Shelter, a housing and homelessness charity.

Deposits for Lodgers
For lodgers, landlords can request a reasonable deposit at the start of a new license agreement. This deposit may cover potential damages. Unlike assured shorthold tenancies, resident landlords are not obligated to protect lodgers' deposits in government-approved schemes.

Rental Fees: What You Need to Know
The Tenant Fees Act prohibits all mandatory rental fees except for:

Rent itself.
The holding deposit.
The tenancy deposit.
Some default fees, which must be specified in the tenancy agreement.

Default Fees Explained
Late Rent Fees: Landlords can charge fees if rent is over two weeks late, with a maximum of 3% plus the Bank of England base interest rate.

Fees for Lost Keys: Charges for lost keys or security devices are permitted, but the amount must be reasonable and supported by evidence.

Changes to the Contract: Landlords can charge up to £50 for altering tenancy terms, such as adding a new tenant or allowing pets. Higher charges are allowed if the costs exceed £50, although this is expected to be rare. Importantly, this exception does not apply to renewals or changes in tenancy duration.

Other Fees: Optional fees remain legal but must be genuinely optional. For example, the choice between cleaning the property yourself or paying for a professional cleaning service constitutes an optional fee. We're proud to announce that My House Online has never charged any admin or agency fees, ensuring tenant protection from unfair charges.

Rent in Advance: Meeting Your Rental Obligations
In most UK tenancies, rent must be paid in advance of the rental period it covers. For example, if your rental period runs from the 10th to the 9th of the following month, you must pay next month's rent before the 10th.

It's common to pay the first month's rent in advance when moving in, and occasionally, additional months' rent may be requested upfront. This typically involves one month's rent, but it's essential to review your tenancy agreement for precise terms before signing.

If you've agreed to pay more than one month's rent in advance, you won't need to make another payment until the period it covers has elapsed. For instance, if you pay three months' rent in advance for a tenancy starting in September, your next payment wouldn't be due until December.
To sum it up, gaining a firm grasp of the financial aspects of tenancy, encompassing everything from holding deposits to rental fees, provides you, as a tenant, with the knowledge and confidence you need. At My House Online, our commitment is to ensure your move-in process in King's Lynn, Norfolk is characterised by utmost transparency and clarity.