ACT Commercial Security Deposit Laws: Rules and Best Practices

Unlike residential tenancies in the Australian Capital Territory (ACT), which enforce a strict maximum bond limit of four weeks' rent, commercial security deposits operate largely in a free-market environment. The Leases (Commercial and Retail) Act 2001 does not impose overarching statutory caps on the size of commercial deposits.

Disclaimer: This guide provides general legal information for educational purposes only. Commercial leases vary significantly. Always consult a qualified ACT commercial solicitor. Information last verified: March 2026.

No Statutory Limits

In ACT commercial real estate, the size and nature of a security deposit are determined entirely by negotiation between the landlord and tenant.

• No Deposit Cap: Depending on the tenant’s financial strength and trading history, landlords may require anywhere from 1 to 6 months' gross rent as security.
• Risk Assessment: A brand-new startup will typically be asked for a much larger deposit than an established national retailer with strong financial covenants.
• No Mandatory Protection Schemes: Landlords are not required to lodge commercial deposits with the ACT Rental Bonds Office.

Bank Guarantees vs. Cash Deposits

While cash deposits exist, the prevailing standard in ACT commercial leasing is the Bank Guarantee.

Bank Guarantees

A bank guarantee is a document issued by the tenant's bank. It unconditionally promises to pay the landlord a specified amount if the tenant defaults on the lease (e.g., fails to pay rent or fails to leave the premises in the agreed condition).

• Security for Landlords: Landlords prefer bank guarantees because they protect against tenant insolvency. If a tenant goes bankrupt, a cash deposit held by the landlord might be clawed back by liquidators. A bank guarantee remains valid and payable by the bank.
• Benefit for Tenants: The tenant doesn't have to hand over raw cash, though the bank will usually require the tenant to secure the guarantee against other assets or a term deposit.

Making a Claim (Drawing Down)

If the landlord needs to draw down on the security (whether cash or a bank guarantee) due to a tenant breach, the specific process is dictated entirely by the lease agreement. The landlord must generally notify the tenant of the breach and the intention to draw down the funds.

During periods of legislative intervention (such as the COVID-19 pandemic response), the ACT government mandated that drawing down on security required prior "good faith negotiations," highlighting that while unguarded by caps, deposits are still subject to broader tenant protection frameworks.

Dealing with End-of-Lease Dilapidations (Make Good)

Commercial deposits are most frequently drawn upon at the end of the lease to cover "make good" obligations—the cost of returning the property to the condition specified in the lease.

• If the tenant fails to strip out their retail fit-out or repair damages, the landlord will present a formal Schedule of Dilapidations and draw the cost from the bank guarantee.

How Landager Helps

Managing paper bank guarantees is a constant risk for commercial landlords—if the paper document is lost, the security is lost. Landager allows you to digitize and track Bank Guarantee expiration dates, ensuring you possess valid security throughout the entire lifecycle of your ACT commercial leases.

Back to ACT Commercial Lease Laws Overview.