NSW Holding Deposits


In NSW, Holding Deposits are legally known as Holding Fees. The maximum holding fee that can be charged is 1 weeks rent and this money is credited towards the first rent payment when the tenancy starts.

This guide covers landlords (or head-tenants) and tenants (or sub-tenants) in a Residential Tenancy. This applies to the majority of share accommodation and residential property rental situations. To confirm it covers your situation visit What is my share accommodation situation?

In NSW the only types of payments a landlord may collect from a tenant pre-tenancy is a holding deposit, rent in advance, or rental bond. The tenant can volunteer to pay rent in advance or the Rental Bond before entering the agreement, however the landlord cannot compel them to do so. It is advisable to only pay rent in advance or the Rental Bond once the tenancy agreement has been signed.

Therefore before signing the tenancy agreement, a Holding Deposit may be used to provide assurance for both parties that the tenancy will be going ahead.

When a Holding Fee can be charged?

The landlord can only require a holding fee once both the landlord and tenant intend to enter an agreement.

The landlord cannot take a holding deposit for a rental premise from more than one prospective tenant at any one time.

What is the maximum Holding Fee amount?

The Holding Fee cannot be more than the equivalent of 1 week’s rent. This must be the same rental amount which is listed in the proposed residential tenancy agreement.

Is a receipt required by law?

When a landlord receives a Holding fee from a prospective tenant, the landlord required by law to give the prospective tenant a written receipt stating:

  • Amount and date of the Holding Fee,
  • Address of the premises, and
  • Names of landlord and prospective tenant.

What are the Landlord’s obligations?

The landlord must not enter a residential tenancy agreement for the premises with a different prospective tenant for 7 days after the payment.

The tenant and landlord may agree for the period to exceed 7 days.

If the prospective tenant notifies the landlord that they no longer want to enter an agreement, then the landlord is free to enter an agreement with a different prospective tenant.

What happens to the Holding Fee?

The landlord keeps the Holding Fee when:

  • The tenant enters the agreement, or
  • The tenant refuses to enter the agreement.

If the tenant does enter the agreement, the fee goes towards the payment of rent.

The Holding Fee is returned to the tenant if:

  • The landlord refuses to enter agreement, or
  • The tenant refuses to enter agreement because of a misrepresentation or false statement by the landlord, or the non-disclosure of a material fact by the landlord.

Transferring money safely

When paying your deposit, bond or rent by cash make sure you get a receipt. With modern phones this can be as simple as an SMS or email confirming the amount, date and what it is for. Keep a copy of this incase you need it later.

Never ever transfer money to a bank account outside of Australia or use a untraceable money transfer system such as WESTERN UNION. If anyone asks you to do this on any website it is likely to be a scam and you are almost guaranteed to lose your money.

If this ever happens on Flatmates.com.au report the member immediately so we can investigate and take the appropriate action.

You might also be interested in

NSW Bonds
NSW Tenancy Agreements
NSW Rental Payments

These legal guides provide a brief summary and introduction of the laws and regulations affecting share accommodation. They do not cover all cases in all legal jurisdictions and might not apply in your specific share accommodation situation. It is important that you use this information as a guide only and seek independent Legal Advice or consult the Relevant Acts. We do not accept any liability that may arise from the use of this information.