The purpose of a holding deposit is to demonstrate the tenant's commitment to renting the property and to compensate the landlord for taking the property off the market while the tenant finalises the paperwork relating to the lease. 

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All these payments have a common theme in that they are usually made at the start of a tenant but they all have different meanings.

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The Bond is a security deposit that is collected upon signing of the lease and lodged with the official bond authority of your state. It protects the landlord during the lease in the instance of property damage or breach of the lease agreement.

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An Early First Payment refers to a sum of money that is taken at the start of the lease that gets put towards the first rental payment. It is usually based on the first rental payment period. 

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A Holding Deposit is a payment that is made prior to start of a tenancy to take it off the market whilst the details of the lease agreement are sorted.  

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Guarantees commitment: When a tenant pays a holding deposit, they show that they are committed to renting the property as they have already invested some money in it. This reduces the likelihood of the tenant changing their mind and withdrawing their offer, which can save the landlord time and effort in finding a new tenant.

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Covers expenses: If a tenant pays a holding deposit but then changes their mind and decides not to rent the property, the landlord may be able to keep the deposit to cover any costs they have incurred during the rental process, such as advertising or credit checks.

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Reduces vacant periods: A holding deposit can help to reduce the time that a rental property is vacant. By securing a tenant before the tenancy agreement is signed, the landlord can avoid periods of lost rental income and ensure a smoother transition between tenants.

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Encourages serious tenants: Requiring a holding deposit can help to weed out less serious tenants who may be less likely to follow through on their rental application. Tenants who are willing to pay a deposit are generally more committed and reliable, which can save landlords from potential headaches down the line.

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Speeds up the rental process: A holding deposit can incentivise tenants to complete the rental process quickly, as they have already made a financial commitment. This can help to speed up the process of signing the tenancy agreement and getting the tenant moved in, which is beneficial for both the landlord and tenant.

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The amount of the holding deposit is usually equal to one week's rent, but it can vary depending on the state or territory. You can find the information for each state below.

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New South Wales (NSW)

Fair Trading

• A landlord or agent may ask a tenant to pay a holding deposit (also known as a holding fee) if they have approved the tenant’s application and are offering the tenant the property. Holding deposits cannot be more than one week’s rent.
• If a tenant has paid a holding fee, the landlord or agent cannot sign a tenancy agreement with any other person within seven days of receiving the payment. 
• If a tenant signs the agreement, the holding deposit must be paid towards the rent.
• If the landlord does not sign the agreement, the holding deposit must be given back to the tenant.
• If the tenant does not sign the agreement, the landlord or agent may keep the holding deposit unless the tenant did not sign the agreement because the landlord or agent did not inform them of any ‘material facts’ or made a false or misleading representation.

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Victoria (VIC)

Consumer Affairs

• A rental provider or agent may ask a potential renter for a ‘holding deposit’ before a rental agreement is signed.
• There are no restrictions on the amount that can be charged but typically, the holding fee is equivalent to one to two weeks' rent.
• The money must be refunded once both parties sign the agreement.
• If they don’t sign an agreement within 14 days, the money must be refunded by the next business day.

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Queensland (QLD)

Residential Tenancies Authority

• The lessor can only accept a deposit from a prospective tenant if a copy of the proposed agreement and any bylaws have been given to the tenant. 
• The only deposit that can be taken from tenants at this stage is a holding deposit (application deposits are not allowed).
• The time period for which a holding deposit will apply is negotiated between the parties and should be stated on the receipt. If no holding period is on the receipt, then the period defaults to 48 hours.
• On accepting a holding deposit, the lessor must give a signed receipt and ensure the property is available if the person proceeds with the tenancy.
• If the prospective tenant does not proceed with the tenancy and advises the lessor/agent within the holding period, the entire holding deposit must be refunded within three days.
• If the prospective tenant fails to notify the lessor of their decision not to go ahead with the tenancy within the agreed holding period or indicates they will proceed with the tenancy but then fails to enter into the tenancy agreement, they will forfeit the holding deposit to the lessor.
• When a tenant signs a tenancy agreement after paying a holding deposit, the holding deposit becomes part of the rental bond. Any surplus amounts then become rent in advance.

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South Australia (SA)

SA Government

• Landlords can ask a prospective tenant for a ‘consideration payment’ (deposit) before the lease agreement is signed.
• If the prospective tenant doesn’t sign at a later date, the landlord could keep all or some of the deposit. If they do sign the lease agreement, the landlord must put that money towards the rent.

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Tasmania (TAS)

Consumer, Building and Occupational Services

• If the owner agrees to hold a vacant property for more than seven days until the tenant can move in. 
• Typically, the holding fee is equivalent to one to two weeks' rent.
• An owner cannot charge any other fees, such as an application fee or a fee to find a property for a tenant
• If the tenant agrees to enter the agreement and pulls out then the fee is not refundable. 
• If the landlord breaches the agreement by not holding the premises for the tenant and enters an agreement with another tenant then the fee is refundable to the tenant. 

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Western Australia (WA)

Commerce WA

• An ‘option fee’ is charged to the prospective tenant while their application is being considered and are capped at $50 or $100
• The landlord and tenant can agree to an option period of any length.
• If the application is successful, the option fee paid must be deducted from the first rent payment or the money returned to the tenant. 
• If the applicant is not offered the property, the option fee must be refunded to them by cash or electronic transfer as soon as possible, and at the latest within 7 days of the application being refused.

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Northern Territory (NT)

• In the NT, landlords are not permitted to request or receive any kind of holding deposit.
• The only payments pre-tenancy the landlord may receive are rent in advance and the bond.

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Australian Capital Territory (ACT)

• In the ACT, landlords are not permitted to request or receive any kind of holding deposit.
• The only payments pre-tenancy the landlord may receive are rent in advance and the bond.

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Holding deposits are usually held for a short period of time, typically no more than one week. During this time, the tenant is expected to sign the lease agreement and pay the required bond and first rental period payment which is based on their nominated payment frequency - weekly/fortnightly/monthly.

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If the tenant decides not to rent the property after paying the holding deposit, the landlord is usually entitled to keep some or all of the money to compensate for their time and expenses. 

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However, if the landlord decides not to rent the property to the tenant, the holding deposit must be refunded in full.

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It is recommended that the terms of the holding deposit arrangement be set out in writing, either in the lease agreement or in a separate holding deposit agreement. This can help to avoid misunderstandings or disputes between the landlord and tenant. 

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You would usually collect the deposit via bank transfer and it is always also best practice to issue a receipt to the tenant as proof of payment.

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