It takes about a week, 7 days, from when a renter reserves a home to when they sign the tenancy agreement. Therefore, the holding deposit will be split into seven payments that will be returned to the renter on a pro-rata basis. The remaining of the holding deposit goes to the landlord to compensate for lost time.
This means if a renter backed out earlier in the process, they'll be refunded most of the holding deposit, less a small amount that will be compensated to the landlord. If the renter back out at the very end, right before the tenancy agreement is signed, they'll most likely lose all of the holding deposit. Logically, this means the landlord will receive almost all of the deposit.
Jennifer has accepted an offer and reserved the property by paying the holding deposit, a fee of one week's rent, which in this scenario is £700. If she changes her mind and decides to back out two days after the home is reserved, £200 will be deducted from her deposit. £500 from the deposit will be refunded to Jennifer within 24 hours of her cancelling the offer and the £200 will go to the landlord.
£700/7 days (how long the process takes on average) = £100
£100 * 2 days (how much time has passed since I've reserved the property) = £200
£700 - £200 = £500 (remaining deposit that will be refunded to me)