Security Deposits in Commercial Leases: What's Different

Where the Model Tenancy Act framework applies, commercial deposits are capped at six months' rent — three times the residential cap — reflecting the higher risk and longer lock-in typical of business tenancies. In practice, commercial deposits have historically ranged from 6-10 months of rent, though modern Grade A properties increasingly trend toward the 3-6 month range.

A common friction point in commercial leases is landlords withholding 10-20% of the deposit for restoration or reinstatement charges at lease-end, often without a clear basis. Negotiating a defined restoration scope and cost cap into the lease upfront prevents this becoming an open-ended deduction.

A specific, itemised restoration obligation rather than a vague clause.

A joint move-in condition report, the same principle as residential leases but scaled to fit-out and equipment.

A defined refund timeline with a penalty or interest clause for late refunds, since commercial deposits involve materially larger sums of locked capital.

Because the amounts involved are larger and the terms more negotiable than a standard residential tenancy, validating every claimed deduction against the original move-in report is what keeps deposit leakage close to zero in commercial leases.