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What Happens To Your Rental Deposit?


What Happens To Your Rental Deposit?

It is common cause for any landlord in today's rental market to request a deposit upfront from prospective tenants, however, there are often questions that arise around the return of this deposit when the lease is later cancelled or expires.

Rental deposit regulations

The amount due as a rental deposit should be discussed and stipulated in the lease agreement, and will held by the landlord or by the managing agent responsible for facilitating the relationship between the tenant and landlord.

Chapter 3 of the Rental Housing Act, 50 of 1999 regulates certain aspects of the relationship between the landlord and the tenant. This ensures that neither of the parties can take advantage of the other without consequence. This chapter also goes further and states that the deposit is to be placed in an interest-bearing account that has a interest rate no lower than that of a savings account. The tenant is also within his or her right to request proof of such investment.

The deposit and interest accrued on such can be used for any amounts for which the tenant is liable under the lease agreement. For example, should the tenant have negligently caused damage to the property, the landlord may retain these funds to cover the necessary repairs. However, this should be done with caution and to avoid any disputes on this aspect the landlord should follow applicable sections of the Rental Housing Act, including that upon expiration of the lease the landlord and tenant must arrange a joint inspection of the property.


Should a dispute arise which cannot be amicably resolved, intervention by an independent adjudicator may become necessary. Such independent adjudicators have been granted certain powers to resolve disputes relating to aspects such as deposits, non-payment of rentals owing, and unlawful disconnections.

Should the tenant remain in the property whilst the dispute is being lodged or resolved, both parties must still adhere to the conditions of the lease agreement. If either party is not satisfied with the outcome, the matter can be taken on review to the High Court.

Best practice

There are several aspects to consider when renting out a property, and what might seem obvious to one party might not even have been in the thought process another. Landlords and tenants must insist that the lease agreement is placed into writing and that it is clearly and transparently structured.

Initial and outgoing reports / inspections must also be done to ensure that all points are noted. This will safeguard against any unsubstantiated claims when the lease expires.

Author Snymans Inc Attorneys
Published 30 Apr 2019 / Views -
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