Why do I have to pay a deposit

It is general practice for landlords to request a deposit from tenants, said RE/MAX of Southern Africa regional director and CEO Adrian Goslett. In fact, a landlord is legally entitled to do this.

The deposit amount is stipulated in the lease agreement, to which the tenant must agree and sign before they gain access to the rental property.

“Usually the rental deposit amount is one month’s rent,” says Goslett.

“However, landlords nowadays often ask for two months’ rent as a deposit, due to the risk of defaulting tenants and the lengthy, expensive process involved in evicting them.”

Goslett explains that tenants are protected by the so-called “PIE” act – the prevention of illegal eviction act of 1998.

If the correct procedures are followed, it can take at least eight to ten weeks for an eviction order to be granted, during which time the landlord is out of pocket.

Besides the landlord not getting any rental income from the defaulting tenant during that period, he or she must also pay legal costs.

These costs depend on the sheriff’s fees and whether the matter is opposed or not.

An unopposed eviction could cost anything between R12 000 and R20 000.

An opposed matter would cost substantially more.

“When a tenant pays a deposit, the landlord is required by law to place that money in an interest-bearing account at a financial institution,” says Goslett.

“The tenant is within their rights to request a statement of the interest earned on the money at any time during their tenancy.”

Even though the deposit is paid to the landlord, Goslett explains that it remains the tenant’s money – the landlord is merely holding the money as a security measure, should the tenant default or breach the rental agreement.

If the tenancy runs its normal course, the deposit – along with all interest earned on the money – must be paid back to the tenant at the end of the lease agreement period.

The landlord can deduct from the rental deposit any expenses incurred to repair damage to the property that occurred during the tenancy.

The remainder of the money must then be refunded to the tenant, no later than 14 days after the restoration of the property.

“Once repairs are completed, the tenant can ask to see the receipts to confirm the money was spent on repairing the damage. The landlord cannot use the deposit for general maintenance or upkeep of the property,” Goslett says.

“If there is no damage to the property, the full deposit and interest must be paid to the tenant within seven days of the lease’s expiration date.”

Any disputes between the landlord and the tenant can be taken to the Rental Housing Tribunal.

The tribunal informs landlords and tenants of their rights and obligations. It also mediates and resolves disputes between the parties.

“Before entering into a rental agreement, tenants should familiarise themselves with their legal rights regarding a tenancy and their rental deposit,” Goslett advises.

“Knowledge of the relevant procedures can help prevent unpleasant and costly disputes down the line.”