What is the deposit at exchange of contracts?
The deposit at exchange is the sum the buyer pays when contracts are exchanged, usually 10% of the price. It commits the buyer: if they fail to complete, the seller can serve a notice to complete and, if that expires, keep the deposit and resell. A lower deposit, such as 5%, can be agreed but gives the seller less protection.
Read more in our guide: Portfolio sale timescales
Deposit essentials
| Point | Typical position |
|---|---|
| Amount | 10% of the price; 5% by agreement |
| Paid | On exchange of contracts |
| Held as stakeholder | Kept by the seller's solicitor until completion |
| Held as agent | Can be passed to the seller, often for an onward purchase |
| Buyer defaults | Notice to complete, usually 10 working days |
| After notice expires | Seller can rescind, keep the deposit and claim further loss |
Why the deposit matters
Before exchange either side can walk away. At exchange the contract becomes binding and the deposit is the buyer's money at risk. That is why it is the strongest protection a seller has against a late collapse, and why sellers should be wary of very low deposits from buyers with an unproven track record.
How it is held
Under the standard conditions used in most residential sales, the deposit is held by the seller's solicitor. If held as stakeholder it stays with the solicitor until completion. If held as agent it can be released to the seller earlier. Most landlords do not need it before completion, because they are not buying another home in a chain.
If the buyer fails to complete
If completion does not happen on the agreed date, the seller can serve a notice to complete, usually giving 10 working days. Interest is payable for late completion. If the buyer still fails, the seller can end the contract, keep the deposit and resell, claiming any further loss. If the deposit paid was less than 10%, the buyer is usually liable for the balance up to 10%.
On a portfolio sale
A portfolio is often exchanged under one contract with one deposit, or with linked contracts. Agree in the heads of terms how much deposit is paid, whether exchange and completion are simultaneous, and how a delayed property is handled. Investors buying quickly sometimes exchange and complete on the same day, which removes the deposit question altogether; see exchange and completion.
Official Sources and Further Reading
General information for landlords in England, checked against official sources in October 2026. It is not tax, legal or financial advice: speak to a qualified accountant or solicitor about your own circumstances.
Frequently Asked Questions
The deposit at exchange is the sum the buyer pays when contracts are exchanged, usually 10% of the price. It commits the buyer: if they fail to complete, the seller can serve a notice to complete and, if that expires, keep the deposit and resell. A lower deposit, such as 5%, can be agreed but gives the seller less protection.
Yes, if you are comfortable with the buyer. The contract can still make them liable for the full 10% if they default.
Yes. The buyer pays the balance on completion, and the completion statement shows the deposit already paid.
Normally not. Once contracts are exchanged, the buyer must complete whatever happens to their finance.
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