There is some confusion between the two kinds of deposits that prospective tenants are commonly asked to pay by landlords and agents.

Holding deposit:

If you make an offer to a letting agent or a landlord for a property, the latter may require you paying a holding deposit. In return, the property is no longer marketed. Thus, this is the way to secure a property in which you, as a prospective tenant, are interested. The problem with this is that a landlord may decide not to accept the offer for any reason by simply returning the holding deposit to you. Whereas if you withdraw the offer the deposit is forfeit. So the prospective landlord can withdraw with no financial penalty but the prospective tenant cannot.

Tenancy deposit:

Once there is a tenancy agreement signed between you and the landlord, the holding deposit becomes a tenancy deposit. Under the law in England and Wales, if you have an assured shorthold tenancy (the most common type of private tenancy agreement) that started on or after 6 April 2007, your landlord must put your deposit in a Government-backed protection scheme within 30 days of getting it.

An approved tenancy deposit protection scheme will ensure your deposit is returned to you, provided you have met the terms of the tenancy agreement, you have paid your rent and bills, and you do not cause property damage.

If you agree with your landlord how much deposit you will get back, it has to be returned to you within 10 days of the tenancy ending. If you are in a dispute with your landlord, then your deposit is protected until the issue is sorted.