Rental deposits - All you need to know
Category Property Advice
Rental deposits are a common practice in tenancy agreements in South Africa. While the rules for handling rental deposits are outlined in the Rental Housing Act, there are still a few misconceptions amongst landlords and tenants.
What is a rental deposit?
According to the Rental Housing Act 50 of 1999, tenants are not legally obliged to pay a deposit. A landlord, however, is legally allowed to ask for one. A rental deposit serves as a safety net for a number of possible events, such as absconding tenants, damage to property, and failure to pay the final month's rent.
While the law does not specify the amount of the deposit, both the tenant and landlord or letting agent are required to agree on the amount. The deposit must be specified in the lease agreement. The rental deposit is usually paid either with the first month's rent or when the lease is signed, prior to occupancy.
When the landlord receives the deposit he/she must issue the tenant with a written receipt. This receipt must include the tenant's name, date, amount of deposit and the address for the property the deposit relates to.
The deposit must be held in an interest-bearing account. The interest rate paid on the account holding the deposit must be equivalent to the bank's main savings account rate. At any time during the lease period, a tenant can ask for written confirmation of the interest accrued on the deposit.
When can a landlord use the rental deposit?
To ensure that the rental deposit is not compromised, according to the Rental Housing Act, the landlord and the tenant must inspect the property for damages or defects together before the tenant can occupy the premises. The shortcomings must be stated in writing.
The landlord and tenant are also responsible to do a joint inspection of the property when the tenant has chosen to move out when the lease has expired.
If there are any damages caused by the tenant, the landlord may use the deposit and interest towards the payment of all amounts for which the tenant is liable under the said lease. These costs can include replacing lost keys, garage remotes, broken windows and such.
How can a tenant protect their rental deposit?
Tenants are currently asked to pay anywhere between one and three months' rent as a rental deposit. Most of the time they are unsure what they need to do to get it back when their lease ends.
Taking high-quality photos at the initial inspection with the landlord is a great way to keep a visual record of what the property looked like. If there are existing damages tenants can insist that their photos are also attached to the lease agreement and signed by the landlord. This ensures that both the tenant and landlord is aware of the move-in condition of the property.
If the tenant is liable for any damages within the lease period or after it will be wise to get at least three competing repair quotes. This can save the tenant money.
Tenants need to be aware that if they refuse to attend a joint inspection when the lease has ended, they can be held liable for damages to the premises. The landlord also has the right to take legal action and the tenant would be responsible for the costs.
The Rental Housing Act specifies the time periods within which the rental deposit plus interest needs to be paid back to the tenant after the lease has expired:
- Within seven days if there are no damages.
- Within 14 days if there are damages and repairs are required.
- Within 21 days if a tenant refuses a joint inspection.
If you are a tenant looking for a great place to rent, or a landlord that needs their rental property managed by experienced agents, contact Knight Frank Properties today.
Author: Knight Frank
