Holding Deposits in Melbourne for First Home Buyers

We get asked about holding deposits by first home buyers who have just left a Melbourne open inspection and been told a small payment will ‘hold’ the property. It feels urgent, and it can be hard to tell the difference between a normal sales step and a risky one.

The short answer: In Victoria, a holding deposit is usually a small pre-contract payment made to an estate agent to show serious interest before a contract of sale is signed. The money should be treated as trust money and held in the agent’s trust account, but it does not make the property legally yours or stop the vendor accepting another offer. If no binding contract has been formed, the holding deposit is generally refundable, although you should get advice before signing any Letter of Offer or Expression of Interest that says the money is ‘non-refundable’ or that you are bound to buy.

What is a holding deposit in Melbourne property sales?

A holding deposit is a pre-contract payment, not the full contract deposit. Buyers usually pay it after they have decided to make an offer on a house, but before the vendor has signed the contract of sale.

Melbourne agents may ask for $500, $1,000 or another small sum, especially after busy weekend inspections where several buyers are interested. Some apartment sales campaigns ask for a percentage of the price. There is no fixed Victorian cap for this pre-contract holding amount, so the safer approach is to keep it modest and make sure the purpose is written down.

The clearest wording is simple: ‘holding deposit for [property address], subject to contract and section 32 review’. That phrase makes it much harder for anyone to later argue that you meant to give up the money if the deal did not proceed.

Does a holding deposit take the property off the market?

No, a holding deposit does not, by itself, take the property off the market. In Victoria, the sale becomes binding when both buyer and vendor have signed the contract of sale, not when a buyer pays a small holding amount.

This is the part that catches first home buyers. You may feel as though the property is ‘yours’ because the agent has taken your card payment or bank transfer. The vendor can still accept a higher offer before contracts are signed. That is gazumping, and while it feels rough, it is not banned in Victoria.

The real protection is a properly reviewed and signed contract. Before you sign, ask for the contract and the section 32 vendor statement, then send both to your conveyancer. If the sale is by private treaty, your cooling-off position may also matter after you sign, but it is not a substitute for checking the documents first.

Is a holding deposit refundable in Victoria?

A holding deposit is generally refundable if no binding contract has been signed. The reason is practical: the money was paid for a proposed sale, and if that proposed sale does not go ahead, the agent should not simply keep the buyer’s money.

Refunds are usually straightforward when:

your offer is not accepted
your conveyancer finds a problem in the contract or section 32
the vendor chooses another buyer
you decide not to proceed before signing a binding contract
price, settlement or conditions cannot be agreed

The risky cases involve written documents. A short Letter of Offer or Expression of Interest can look harmless, but some forms contain firm promises about price, timing, deposit payments or signing a later contract. If you are unsure whether a Letter of Offer binding in Victoria applies to your situation, get the wording checked before you sign it or pay money.

How should the agent handle the holding deposit?

The agent should handle the money through a proper agency trust account, not a personal account or cash envelope. A licensed Victorian estate agent receiving money connected with a sale must deal with that money as trust money.

Ask for written payment details before you pay. A safe receipt trail usually includes:

the licensed agency name
the trust account name, BSB and account number
the property address
the amount paid
the date paid
wording showing it is a holding deposit, subject to contract
confirmation of how the money will be refunded if the sale does not proceed

We’ve seen this issue arise most often when a buyer is excited after an inspection in suburbs like Brunswick, Preston or Bentleigh and pays quickly from their mobile without checking the account name. Slow down for two minutes. A genuine agent should have no problem giving you trust account details and a proper receipt.

Holding deposit, EOI and contract deposit: what is the difference?

A holding deposit is the money, an Expression of Interest is a document, and a contract deposit is part of the signed purchase contract. The names sound similar because agents use them together, but they do different jobs.

A holding deposit tells the agent you are serious. It should sit in trust while the offer is being considered.

An Expression of Interest or Letter of Offer records the price you are offering, your proposed settlement period, deposit amount and conditions. It may be non-binding, or it may create risk depending on its wording.

A contract deposit is different. It is paid under the contract of sale, usually after signing. Ten per cent is common in Victoria, but a smaller amount can be negotiated in some private sales. For off-the-plan purchases, special deposit rules apply, and buyers sometimes ask about split deposits or a deposit bond if cash timing is tight.

Once you reach the contract stage, special conditions matter. Finance clauses, building inspection clauses, settlement timing and default clauses can change your risk, so have the contract special conditions checked before you sign.

What should first home buyers do before paying a holding deposit?

Before paying, confirm the money is small, traceable and clearly refundable if no contract is signed. The aim is to show good faith without giving away control.

Use this quick check:

Ask the agent for the contract of sale and section 32 before you pay.
Send the documents to your conveyancer for a same-day or next-day review where possible.
Ask whether the holding deposit is refundable if the sale does not proceed.
Get the answer in writing, preferably by email.
Pay only to the licensed agency trust account.
Keep a copy of the receipt and bank record.
Do not sign anything marked ‘binding’, ‘non-refundable’ or ‘unconditional’ until it has been reviewed.

If you are being pushed to pay on the spot, take a breath. A rushed $1,000 payment can create weeks of stress if the paperwork is messy.

What if the agent will not refund the holding deposit?

Ask for the refund in writing and keep the tone calm. State the property address, the amount paid, the date paid, and why the proposed sale is not proceeding.

A practical first email might say that the payment was made as a holding deposit only, subject to contract, and that no binding contract has been signed. Ask the agency principal to return the money to the original payment account within a set period, such as seven days.

If that does not work, speak with your conveyancer about the next step. That may include a complaint to Consumer Affairs Victoria, a trust account complaint, VCAT action, or a Victorian Property Fund claim where money has been misused by a licensed agent. The right path depends on what was signed, how the money was paid and whether the agency still holds it in trust.

Five red flags before you pay

The safest holding deposits are boring. The risky ones come with pressure, vague wording or poor payment records.

Watch for:

a request for cash
a bank account in an individual agent’s name
no receipt or a receipt with no trust account details
pressure to sign at the open inspection
wording that says the holding deposit is ‘non-refundable’
promises that the property is ‘secured’ before the vendor signs
an EOI that reads like a full contract

If you see one of these, do not assume it is normal Melbourne practice. Send the document to your conveyancer before you pay.

Frequently asked questions

What is a holding deposit when buying property in Melbourne?

A holding deposit is a small pre-contract payment made to a licensed estate agent to show that you are serious about buying a property. It is usually paid before the vendor signs the contract of sale and should be held in the agent’s trust account. It does not, by itself, make the sale binding.

Is a holding deposit refundable in Victoria?

A holding deposit is generally refundable if no binding contract of sale has been signed. If the vendor rejects your offer, chooses another buyer, or the deal falls over before contract signing, the agent should usually return the money. Get advice if you signed an EOI or Letter of Offer that says the money is non-refundable.

Can the seller still accept a higher offer after I’ve paid a holding deposit?

Yes. A Victorian vendor can still accept a higher offer until both parties have signed the contract of sale. Paying a holding deposit may show good faith, but it does not stop gazumping.

How much should a holding deposit be in Melbourne?

There is no set legal amount for a holding deposit in Melbourne. Many first home buyers are asked for a few hundred dollars or a few $1,000, while some campaigns ask for more. Keep the figure modest, and be cautious about paying more than one per cent before contract review.

Does a holding deposit attract stamp duty in Victoria?

No, a holding deposit on its own does not trigger stamp duty. Duty is assessed when there is a dutiable property transaction, usually after a contract of sale is signed. Your conveyancer will calculate duty as part of the purchase process.

Should I sign a Letter of Offer or EOI when I pay the holding deposit?

Only sign a Letter of Offer or EOI after a conveyancer has checked it. Many forms are designed to record an offer only, but some include wording that may bind you to key terms. The risk sits in the words used, not the title on the page.

What happens if the agent refuses to refund my holding deposit?

Put the refund request in writing and ask the agency principal to respond. If the money was paid to a trust account and no contract was signed, your conveyancer can help you escalate the issue through Consumer Affairs Victoria, VCAT or another suitable path. Keep all receipts, emails and bank records.

About the Pearson Chambers Conveyancing team

Pearson Chambers Conveyancing is a Melbourne-focused conveyancing team that helps buyers understand contracts before they sign. We work with first home buyers across metropolitan Melbourne who are juggling finance approval, section 32 reviews, deposit timing and settlement dates. Holding deposits come up often in our day-to-day work because they sit right at the point where excitement can turn into legal risk.

Sources we consulted

Need a conveyancer to review the contract before you pay?

Before you pay a holding deposit or sign an EOI, contact Pearson Chambers Conveyancing for a complimentary Section 32 contract review.

Email contact@pearsonchambers.com.au, or book a free section 32 contract review. We’ll help you check the contract, section 32, holding deposit wording and next steps before you commit.

General information only, current as at the date of publication. Victorian conveyancing rules and legislation change frequently. Please contact the Pearson Chambers Conveyancing team for advice on your specific contract.