reduction in rent

Tenancy Deposits

I am a amataur landlord who is renting a flat to a 72 gentleman on DSS. He is a model tenant and is asking me to reduce is rent by £50 pcm as he is only entitled to a one bedroom abode. He is imtimating that he intends to stay long term which i doubt but he suggests in the next tenancy agreement that he will agree to give up his deposit if he leaves early. Historicaly i have never chased this as it is to much hassle. The questions i ask are: Is reducing the rent slightly to potentialy keep a tenant longterm worthwhile and where would i stand if i introduced giving up the deposit if he left early in the next tenancy agreement