How To Manage Your Tenant’s Rental Deposit

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How To Manage Your Tenant’s Rental Deposit

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As a landlord you will require a certain amount of security when it comes to a new tenant. The usual practice is to ask for one month’s rent as deposit, and this should be payable before the tenant can secure the home or apartment for themselves. According to South African property law (Section 5 of the Rental Housing Act of 1999) the landlord is legally allowed to require a deposit from a tenant before the tenant is allowed to take occupation of the property. The amount that is required must be clearly outlined in the rental agreement and the repayment terms for the deposit must also be stipulated. While most landlords only require the equivalent of one month’s rental as deposit, the actual amount to be paid is up to the landlord. In certain cases landlords may require extra security and even ask for the equivalent of two to three months’ deposit before occupation can be taken.

What happens after the deposit has been paid?

The law requires the landlord to keep the deposit money in an account that is interest bearing, and this account must be help with a certified financial services provider such as a bank or building society. The tenant is entitled at any time to ask for a statement of interest that is earned on the deposit, and the landlord is under obligation to provide this when requested. All the interest earned on the deposit during the lease period has to be paid back to the tenant at the end of the lease.

If the landlord decides to use a property management company to manage his or her properties, it is essential that a reliable property manager or estate agent is chosen. Ensure that any property manager you choose is certified at the Estate Agency Affairs Board. This is not only vital to ensure that the tenant’s money is well managed, but also that the landlord’s properties and rental income are properly managed and done in accordance with the law.

Repayment of the deposit

After the lease period has expired it is the right of the landlord to deduct any expenses that were incurred to fix damage that happened while the property was occupied by the tenant. The balance of the deposit, plus the interest incurred must them be refunded to the tenant. It is the right of the tenant to question repairs and costs, and to see receipts and quotations for work and repairs done on the property. It is illegal for the landlord to deduct money that was used for general upkeep and maintenance of wear and tear on the property from the deposit.

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