When entering into a lease of business premises the landlord may require the tenant to provide a rent deposit. This is a sum of money equivalent to, for example, 6 months’ rent. A rent deposit gives the landlord some security in the event that the tenant fails to pay the rent on time or does not comply with its other obligations in the lease. In these circumstances the landlord can deduct sums from the deposit to cover the arrears of rent.
It is crucial from the point of view of the tenant that a formal rent deposit deed is signed. This is a document that sets out when the landlord can call upon the deposit; when it will be repaid and to whom interest will be paid. It should also provide that the rent deposit is kept in a separate account otherwise it could be lost if the landlord gets into financial problems.
For information on tenancy deposits for residential premises follow the link Tenancy Deposit Scheme
Steve Petty
Commercial Property Solicitor
01926 629 005
This blog is not intended to constitute legal advice, nor is it intended to be a complete and authoritative statement of the law, and what we say might be out of date by the time you read it. You should always seek legal advice to confirm whether or how any information in this article applies to your particular situation. We offer a free telephone consultation to discuss your particular circumstances.