Rental Deposits – Tenant and Landlords

Rental deposits have historically been a contentious point in the South African rental property industry. Few landlords and tenants understand their responsibility and how these deposits should be managed – and when some or all of it can be witheld.

Why Pay A Rental Deposit?

A rental deposit is a sum of money paid by a tenant to the landlord at the beginning of a lease. It acts as security in case the tenant causes damage to the property or fails to pay rent. The deposit is usually equal to one to two months’ rent and must be returned at the end of the lease, minus any valid deductions.

However, many tenants experience issues when trying to reclaim their rental deposit.

Legal Aspects of Rental Deposits

The Rental Housing Act (RHA) outlines the rules and obligations of tenants and landlords when handling rental deposits. Some important legal points include:

  • Deposit amount: The law doesn’t set a fixed deposit amount, but it’s typically equal to one or two months’ rent.
  • Interest: Landlords are legally required to invest the deposit in an interest-bearing account. The interest earned belongs to the tenant.
  • Proof of interest: Tenants have the right to request written proof of the interest earned on their deposit at any point during the lease.

Landlords must adhere to these laws to avoid legal disputes. Tenants who understand their rights under the RHA are better equipped to challenge any unfair practices regarding their deposits.

How to Get Your Rental Deposit Back

At the end of the lease, tenants have the right to receive their deposit back, provided they’ve met all the conditions of the rental agreement. Here’s how the process works:

  1. Inspection: The property must be inspected jointly at the beginning and end of the lease. This inspection helps document any damages that may have occurred.
  2. Deductions: Landlords can only deduct costs for tenant-caused damage, such as broken fixtures or unpaid rent. Normal wear and tear (like minor carpet wear or faded paint) cannot be deducted.
  3. Receipts and proof: If there are any deductions, the landlord must provide receipts or evidence of the costs incurred.
  4. Timeline: The landlord must return the deposit within 14 days if there are no damages. If deductions are made, they have 21 days to refund the remaining deposit.

If the landlord does not follow these procedures, tenants can file a complaint with the Rental Housing Tribunal.

When can a landlord deduct money from my deposit?

Your depost could be witheld (or an amount deducted) if any form of damage has been found on the property, that was not on the inspection. However, if it is from normal wear and tear, it is not deductible. Damage is defined as something done where the lifespan of something is drastically reduced. For example, if a wall is painted or a bathroom sink is broken, then this would be damage, not wear and tear. But if door handle would break due to old age, it would be seen as wear and tear.

Practical Examples of wear and tear

  • Example 1: Minor wear and tear: If a tenant has lived in a property for a year, the landlord cannot deduct money for minor carpet wear or faded wall paint. These are considered normal wear and tear.
  • Example 2: Tenant-caused damage: If the tenant breaks a window, the landlord can deduct the cost of repairs from the deposit, but they must provide a receipt showing the repair costs.

Inspection Procedures: Protecting Both Parties

The joint inspection process is essential for avoiding disputes. Inspections should take place twice:

  • Pre-occupancy inspection: Before the tenant moves in, both the tenant and the landlord should inspect the property and document its condition with photos. This protects the tenant from being unfairly charged for pre-existing damage.
  • Final inspection: When the lease ends, another joint inspection is required within three days of the tenant vacating the property. The condition of the property should be compared to the initial inspection report.

Landlords: Legal Guidelines for Handling Deposits

Landlords have a responsibility to manage rental deposits according to the RHA. Proper handling ensures protection for both parties and helps avoid legal issues. Here’s what landlords need to know:

  • Deposit investment: The deposit must be placed in an interest-bearing account. Any interest earned belongs to the tenant.
  • Receipts and proof of interest: Landlords must provide tenants with written proof of where the deposit is invested and how much interest has accrued upon request.
  • Clear deductions: Deductions from the deposit can only be made for damage caused by the tenant, unpaid rent, or missing items that were part of the rental agreement. Landlords must provide receipts for all deductions.
  • Timely refunds: If the deposit is not refunded within the legal timeframe (14-21 days), tenants may report the issue to the Rental Housing Tribunal, which can mediate disputes.

If the landlord fails to conduct the final inspection, the property is considered to be in good condition, and the landlord cannot claim damages from the deposit.

Avoiding Deposit Disputes

For tenants, the key to getting your rental deposit back is understanding your rights under the Rental Housing Act and maintaining clear communication with the landlord. Ensure you participate in both the initial and final property inspections, document any existing damage, and request proof of interest on your deposit.

For landlords, managing deposits legally protects you from financial losses while maintaining a good relationship with tenants. Adhering to the RHA guidelines ensures compliance and helps avoid disputes that could lead to legal action.

Happy investing!

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