What hap­pens to your rental de­posit?

George Herald - Private Property - - Property News -

It is gen­eral prac­tice in to­day's rental mar­ket for land­lords to re­quest a de­posit from their ten­ants be­fore they move into a prop­erty.

Adrian Goslett, re­gional direc­tor and CEO of RE/MAX of South­ern Africa, says the amount the ten­ant will be re­quired to pay as a de­posit is stip­u­lated in the lease agree­ment, which the ten­ant will need to agree to and sign be­fore they gain ac­cess to the rental prop­erty. Ac­cord­ing to Sec­tion 5 of the Rental Hous­ing Act, No. 50 of 1999, a land­lord is legally en­ti­tled to re­quest a de­posit from their ten­ants.

"Con­ven­tion­ally the rental de­posit amount was equal to one month's rent, how­ever, in more re­cent years land­lords have started ask­ing for two months' rent as a de­posit. The in­crease has come about due to de­fault­ing ten­ants and the lengthy, ex­pen­sive process in­volved to evict them," says Goslett.

Le­gal rights

"Ten­ants are pro­tected by the Pre­ven­tion of Il­le­gal Evic­tion from Un­law­ful Oc­cu­pa­tion of Land Act, No. 19 of 1998, also known as the PIE Act. If the cor­rect pro­ce­dures are fol­lowed, it can take eight to ten weeks for an evic­tion or­der to be granted, dur­ing which time the land­lord is out of pocket. Be­fore en­ter­ing into a rental agree­ment, ten­ants should fa­mil­iarise them­selves with their le­gal rights regarding a ten­ancy and their rental de­posit. Knowl­edge of the rel­e­vant pro­ce­dures can help pre­vent un­pleas­ant and costly dis­putes down the line."

Be­sides the fact that the land­lord is not getting a rental in­come from the de­fault­ing ten­ant dur­ing that pe­riod, they will also have to pay le­gal costs. The cost may vary de­pend­ing on the sher­iff's fees and whether the mat­ter is op­posed or not. An un­op­posed evic­tion could cost be­tween R12 000 and R20 000 in le­gal costs plus dis­burse­ments, while the cost of an op­posed mat­ter will be sub­stan­tially more.

In­ter­est-bear­ing ac­count

Goslett says when a ten­ant pays the de­posit, the land­lord is re­quired by the Rental Hous­ing Act to place the money in an in­ter­est-bear­ing ac­count, held with a fi­nan­cial in­sti­tu­tion. Ten­ants are 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, 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 over to the ten­ant at the end of the lease agree­ment pe­riod," says Goslett.

Re­pairs

The land­lord is en­ti­tled to deduct from the rental de­posit any ex­penses in­curred in re­pair­ing any dam­age to the prop­erty which 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 as dic­tated by the Act.

"If re­pairs are com­pleted on the home, the ten­ant can re­quest to see all re­pair re­ceipts to con­firm that the money was spent to re­pair the dam­age they did to the prop­erty. The land­lord can­not use the de­posit for gen­eral main­te­nance or up­keep of the prop­erty. 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 ex­piry date," says Goslett.

Tri­bunal

He says should any dis­putes arise be­tween the land­lord and the ten­ant regarding the rental de­posit they can turn to the Rental Hous­ing Tri­bunal. The tri­bunal in­forms land­lords and ten­ants of their rights and obli­ga­tions and as­sists to me­di­ate and re­solve dis­putes

When a ten­ant pays the de­posit, the land­lord is re­quired by the Rental Hous­ing Act to place the money in an in­ter­est-bear­ing ac­count, held with a fi­nan­cial in­sti­tu­tion.

be­tween the par­ties.

"Be­fore en­ter­ing into a rental agree­ment, ten­ants should fa­mil­iarise them­selves with their le­gal rights regarding a ten­ancy and their rental de­posit. Knowl­edge of the rel­e­vant pro­ce­dures can help pre­vent un­pleas­ant and costly dis­putes down the line."

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