If a tenant has no (or a limited) track record, the Landlord will often require a rent deposit to be lodged as security which can be drawn on by the landlord in the event the tenant fails to comply with the lease.

Whilst this may be fair enough, leases are commonly for a term of ten years and circumstances may change over that period. This can mean that a large sum of money is tied up for a considerable period of time.

If you are proposing to enter into a rent deposit deed, you should consider negotiating provisions which allow for the deposit to be returned to you in certain circumstances. Usually, this would be linked to the tenant satisfying an agreed profits test, but could also allow for a release if the landlord has not had cause to draw on the rent deposit over a specified period of time. At the very least, the deposit should be returned on any assignment of the Lease and not retained as ongoing security for the assignor's liabilities under any Authorised Guarantee Agreement it may be required to give to the Landlord.