Rental Holding Deposits - When, What & Why?

Rental Holding Deposits - When, What & Why?

By Julie Collins

12-09-2016

Upon approval of a tenant's application, the landlord/agent will request payment of 1 week's rent as a holding deposit. A landlord or agent must not require or receive a holding deposit from a tenant unless the tenant's application for tenancy of the residential premises has been approved. The fee cannot be more than 1 week's rent.


Once the tenant has paid the holding deposit, the landlord cannot rent the residential premises to any other person within 7 days of receiving the holding deposit, unless the tenant notifies the landlord that they no longer wish to enter into the residential tenancy agreement (lease).


Upon signing the tenancy agreement, the holding deposit will become the first week's rent of the tenancy. However, if the tenant withdraws from the application or fails to enter into the tenancy agreement within the hold period, the deposit is forfeited to the landlord.


Even if the application has been approved, neither party can be compelled to proceed with an agreement. If the landlord does not proceed, the holding deposit must be refunded in full to the tenant.


Source: NSW Fair Trading


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