A simple guide to deposits, holding fees and referencing

If you are renting a property in England, you will usually come across three key stages before you move in. Paying a holding deposit, paying a tenancy deposit, and completing referencing. If you understand what each step is for, you can avoid stress, move faster, and reduce the chance of delays.

This guide explains what each payment covers, how deposit protection works, how referencing is done, and what can cause a reference to fail.

What each payment actually covers

Holding deposit

A holding deposit is a payment made to reserve a property while checks and paperwork are completed. It is not the same as the tenancy deposit. The rules around how much can be charged, how long a property can be held, and when a holding deposit must be refunded are set out in the Tenant Fees Act guidance.

In most cases, a holding deposit is capped at no more than one week’s rent. Once you move into the property, it is usually put towards your first rent payment or the tenancy deposit, depending on what is agreed in writing.

Tenancy deposit

The tenancy deposit is the larger deposit paid to the landlord, normally before move in. It is used as security in case of unpaid rent, damage beyond fair wear and tear, or other costs that the tenant is responsible for under the tenancy agreement.

In England, tenancy deposits are capped and must be protected in an approved scheme. More detail on deposit caps and permitted payments is included in the Tenant Fees Act guidance.

First rent payment

You will normally pay the first month’s rent before collecting keys. This is separate from the holding deposit and the tenancy deposit. When you pay it, you should be told clearly what period it covers and the date rent will be due going forward.

How deposit protection works

When you pay a tenancy deposit, the landlord or letting agent must protect it in a government approved deposit protection scheme within the required timeframe. They must also provide you with prescribed information about the scheme used.

Deposit protection matters because it gives you a clear process for getting your deposit back at the end of the tenancy and provides a dispute resolution service if there is a disagreement.

You can read the official overview of how deposit protection works via the UK government tenancy deposit protection guidance.

At the end of the tenancy, you should receive your deposit back unless the landlord has a valid reason to make deductions. If deductions are proposed, you can ask for evidence such as invoices, check in and check out reports, and photos.

Referencing steps and how to prepare

Referencing is the process of checking that you can afford the rent and are likely to keep to the terms of the tenancy. It typically includes an identity check, a right to rent check, an affordability assessment and references from employers or previous landlords.

Right to rent checks are a legal requirement in England. The government explains what documents are acceptable and how checks should work in the official right to rent guidance.

To prepare for referencing, it helps to have the following ready before you start viewing properties.

• Photo identification and proof of current address
• Proof of income, such as payslips or an employment contract
• Bank statements if requested for affordability checks
• Previous landlord or agent contact details if you have rented before
• A guarantor prepared in advance if you think you may need one

If you are self employed, it is useful to have recent accounts, tax returns, or an accountant’s reference ready, depending on what the referencing provider requests.

Common reasons references fail

References often fail for reasons that are avoidable. The most common issues include affordability, incomplete documents, and delays from third parties.

• Income does not meet affordability requirements for the rent
• Employment cannot be verified quickly, or employer contact details are incorrect
• Documents are missing, unclear, or do not match the application details
• Credit history issues, depending on the type of checks being used
• Previous landlord references cannot be obtained in time
• Right to rent documentation is not provided or is not acceptable

If there is an issue, it is always best to discuss it early rather than hope it will be overlooked. In many cases, a guarantor, additional evidence, or a different affordability approach can solve the problem.

How Abidins keeps the process clear and stress free

Abidins helps renters move through deposits and referencing with as little confusion as possible by explaining each step clearly and setting expectations early.

We help you understand what payments are required, what they cover, and when they are due. We also guide you on what documents you will need for referencing so you can prepare in advance and avoid delays.

Most importantly, we keep communication clear between tenants, landlords and referencing providers, so the process stays organised and you can focus on planning your move rather than chasing paperwork.