Student lets and Ground 4A: using holding deposits to reserve properties early

The changes brought into renting property practice in England by the Renters Rights Act 2025 have been particularly hard for student landlords.

The loss of the ability to require several months’ rent in advance means that accepting students without a guarantee is now risky.

Plus, student landlords risk tenants ending the tenancy early by a two-month Notice to Quit and missing out on rent for the remainder of the year. Assuming a replacement tenant cannot be found.

The government did introduce a special possession ground, ground 4A, which can be used to evict students staying on, now section 21 is gone. However, it is limited in its use.

A limited possession ground – ground 4a

One of the limitations is that the period between entering into the tenancy and the date the tenants are entitled to possession must be six months or less.

This conflicts with the common practice of students signing tenancy agreements considerably longer than that. Something which both students and landlords found helpful.

I have had quite a few questions in our Landlord Law Members Forum asking how to deal with this. For example,

• One member told me that local agents were using an ‘agreement to let’ document.
• Another asked if getting the students to sign the tenancy agreement but waiting until the deadline had passed before getting the landlord to sign it would comply.

My view is that neither of these would be a good idea and would risk losing your right to use ground 4A.

The important question is when the parties become legally committed. Calling a document an ‘agreement to let’, or postponing the landlord’s signature, may not prevent a binding agreement from being created earlier.

However, there is a solution.

Using a holding deposit

Current legislation provides for landlords to take a holding deposit from tenants to ‘hold’ the property for them.

The default period of time for holding the deposit is 15 days, but the legislation makes it clear that this can be changed by agreement.

Any different deadline must be agreed in writing. The holding deposit must not exceed one week’s rent for the proposed tenancy, even where several students are renting jointly.

So for example if you are negotiating with prospective student tenants in October for a tenancy due to start on 1 July the following year, you can extend the holding deposit period until say, 10 January (the deposit deadline).

Provided you

• Use a holding deposit agreement which reserves the property without creating a tenancy or obliging either party to enter into one;
• Provide any proposed tenancy agreement as a draft, clearly marked ‘subject to contract’, without asking the students to sign it at this stage;
• Do not enter into a binding tenancy agreement before the six-month window begins—for this example, signing from 2 January gives a little margin;
• Give the students the required written Ground 4A advance statement before entering into the tenancy; and
• Enter into the tenancy agreement by the agreed holding deposit deadline.

This gives you a reservation arrangement with the students while postponing the tenancy agreement until the appropriate time. You must still satisfy the other requirements for Ground 4A, which applies to qualifying student HMOs.

It is not as secure an arrangement as signing the tenancy agreement was in the past, but it is better than nothing.

Note that Landlord Law members can use our holding deposit documentation and draft letters.

Find more posts on student lets and the Renters Rights Act.