Feb - Mar 2015

Property managers or owners can ask a prospective tenant to pay a holding deposit to reserve a rental property for an agreed period before the tenancy formally begins.

For example, tenant Marilyn inspected a house, liked it and wanted to go ahead with the tenancy and asked for the place to be held for 48 hours so she could show her partner before they committed to the tenancy.

The property manager could ask Marilyn to pay a holding deposit to hold the place for the agreed period, during which time the property cannot be let to anyone else.

There are no rules around holding deposit amounts.

Before any money is taken the property manager has to give Marilyn a copy of the proposed tenancy agreement, including any special terms, or by-laws if it is a unit.

The manager also has to give Marilyn a signed receipt when she pays the deposit, stating the amount paid, who received the money and the date it was paid, the property manager’s name and Marilyn’s name, the rental property’s address, and that the payment is a holding deposit. Marilyn and the property manager should agree on an expiry date for the holding period, which should also be written on the receipt. If not, the holding period will expire in 48 hours.

Only 1 holding deposit can be taken per property, and if Marilyn decides to go ahead with the tenancy the property manager must do everything reasonably possible to allow her to proceed. Failing to do so is an offence against the Act and penalties apply. If the tenancy goes ahead the holding deposit is put towards the rental bond.

However, if the tenant decides not to rent the place and notifies the property manager within the agreed holding period, the manager must return the full deposit to her within 3 days.

If Marilyn doesn’t let the property manager know whether or not she wants to proceed within the agreed holding period, the property manager can keep the deposit.

A holding deposit is not the same as an application fee. Tenants cannot be charged an application fee.