Looking to rent? Or planning to let out your property? Then you need to be aware of the possible pitfalls that accompany rental deposits.
Section 5 of the Rental Housing Act, No 50 of 1999, allows for a landlord to take a deposit from a tenant before the tenant moves into the property.
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The practice was to pay an amount equal to one month’s rent, but due to defaulting tenants and the lengthy process of evicting such tenants, some landlords are now asking for two months’ rent up front.
The Act also requires that the landlord deposit the money into an interest-bearing account, held with a financial institution.
The tenant has the right to request a statement of interest earned on his money at any time, and is also entitled to receive the deposit and all interest earned at the end of the lease agreement period, on condition that there has been no damage to the property.
To protect both the landlord and the tenant, a pre- and post-occupation inspection of the rental property must be undertaken.
This inspection is the landlord’s responsibility and if he or she does not conduct the inspection, then they are unable to claim against the tenant for damages when the lease expires.
Should there be damages which need to be repaired after the post-occupation inspection, it is the landlord’s right to deduct any repair expenses from the deposit.
The balance of the money must then be refunded to the tenant within 21 days.
The tenant has the right to see all repair receipts to confirm the expenses.
Landlords may not however deduct costs for general maintenance and upkeep (wear and tear) of the property.
If there has been no damage and the tenant is up to date with rent and utilities, the deposit must be refunded within seven days of the lease expiring.
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