RENTAL DEPOSIT PAYBACK

Are you a tenant moving from a current rental property? Here are reasons you landlord may withhold your full deposit and how to prevent it

Economic woes due to lockdown restrictions have left many people with no choice but to move to more affordable homes. However, often rental agents and landlords refuse to release their full deposits. Apart from unpaid rent and damage to the property, are there any other valid reasons to withhold a deposit?

Purpose of a deposit

The rental deposit exists largely to protect the landlord against defaulting tenants and the lengthy, expensive process involved to evict them, says regional director and CEO of RE/MAX of Southern Africa Adrian Goslett. Section 5 of the Rental Housing Act (50 of 1999) states a landlord is legally entitled to request a deposit from their tenants and this deposit can be used to help cover these legal costs.

The amount that the tenant will be required to pay as a deposit is stipulated in the lease agreement. Conventionally, the rental deposit amount is equal to anywhere from one to even three months’ rent.

A deposit should earn interest

By law, the landlord or rental agent has to hold the deposit in a separate interest-bearing trust account with a financial institution. The tenant has a right to request a statement of the interest earned on the money at any time during their tenancy. “Although the deposit is paid to the landlord, it remains the tenant’s money,” says Goslett. “The landlord is merely holding the deposit as a security measure, should the tenant default or breach the rental agreement.”

According to Ben Shaw, CEO of digital rental specialist HouseME, many tenants are unaware their security deposit accrues interest. “If there are no claims on the deposit, the full deposit plus interest must be returned to you within seven days of the lease expiring,” says Shaw. “If there are claims, the landlord must return the balance (if any) of the deposit within 14 days of the lease expiring.”

The landlord cannot use the deposit for general maintenance or upkeep of the property.

Fees and arrears

If a tenant is in arrears with rental or utilities payments, the landlord or rental agent can deduct it from the security deposit.

These charges can include banking fees from failed debit orders, or the cost of issuing a letter of demand, where applicable. The lease will most likely state what these fees are.

If the tenant has signed a fixedterm lease and needs to revoke it early, it’s subject to a reasonable cancellation fee which is usually the equivalent of one or two full months’ rent.

Some lease agreements specify a deposit administration fee. This is an amount agents can charge to hold the security deposit. The deposit administration fee could be a monthly or once-off payment, deductible from your security deposit. However, it’s seldom higher than the interest earned.

Damages will be charged for

The landlord is entitled to deduct any expenses incurred from the rental deposit to repair damage to the property which occurred during the tenancy. If, after the mutual outgoing inspection, the landlord wishes to claim for damages, he or she is required to present invoices for the monies held back.

According to Shaw, claims regarding damages often happen where landlords and tenants are unable to reach an agreement.

He recommends that tenants familiarise themselves with the permissible deductions specified in their lease agreement regarding the security deposit, to prepare ahead of negotiations. During the inspection, those damages should be compared to the snag list completed upon occupation.

“Keep the conversation open and honest about any invoices and deductions that you’re not in agreement with to help you reach an amicable settlement,” says Shaw.

If all else fails, tenants can approach the Rental Housing Tribunal. The main function of this free service is to settle disputes between tenants and landlords.

Getting it right from the start

To minimise chances of being in the same position again, Shaw advises that tenants document the condition of the new home in detail at the time of occupation. It’s essential that both landlord and tenant agree on the condition of the property at the date of occupation.

• Note every fault in writing, no matter how trivial it may seem at the time. |

• Back this up with photographs or a video of the damages or problem areas.

• Supply the landlord or agent with a copy of the snag list and the photographic evidence for their records.

Now is also a good time to check with the landlord or agent that your deposit will be held in an interest-bearing trust account.