Rent deposits

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This Overview summarises what a rent deposit is, including obligations to top up the deposit and provisions in respect of withdrawal (‘draw down’), how deposits are held, and what the usual provisions are in a rent deposit agreement in respect of repayment of the deposit. Further materials are available in our subtopic on Rent deposits.

A rent deposit is a sum of money deposited by a tenant when it takes a lease; it is deposited as security against non-payment of rent and other breaches of the lease. They are often given where a lease is either assigned or granted and the incoming tenant cannot supply the landlord with evidence of sufficient financial worth. They may be offered in place of or in addition to a guarantee to improve the tenant's covenant strength.

Rent deposit agreements usually cover 'any' default or breach by the tenant, and not just rent arrears.

The tenant is usually obliged to 'top up' the deposit if the landlord has made a withdrawal, or if the rent increases at review.

The rent deposit deed should expressly state the circumstances

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