Recent disputes shared on social media about landlords withholding outgoing tenants' deposits have sparked concern about how their deposits should be handled. Some tenants have alleged that landlords have refused repayment, with others resorting to damaging properties in retaliation.
According to experts, in terms of the Rental Housing Act, landlords are legally obligated to place the tenant’s deposit in an interest-bearing account with a financial institution, with the interest rate no less than that of a standard savings account.
Neil Bensch, a senior associate at CK Attorneys in Cape Town, said while a deposit is not a requirement for a valid lease agreement, it is common practice for landlords to require that a deposit be paid.
He said when a landlord does require a deposit, there is no prescribed minimum or maximum amount, however, the common practice is for the deposit to be the equivalent of one to two months' rent.
According to ASI Properties, the interest earned must benefit the tenant, and the rate should be similar to what a savings account at that institution would offer.
“Landlords must provide the tenant with written proof of where the deposit is being held and must provide a full breakdown of interest earned when the deposit is returned. Upon request, the landlord must disclose the details of the account and the interest rate applied,” it said.
Tina Halstead, a partner at Cox Yeats, and Julian Reynolds, an associate at Cox Yeats, argue that the legal frameworks and practical realities differ for residential and commercial real estate.
“Residential leases are regulated by the Rental Housing Act 50 of 1999, as amended. Commercial leases are governed by the lease agreement and general contract law, and while some principles may overlap, landlords and tenants in the commercial space should always consult their lease agreements closely,” they said.
In the residential market, Halstead and Reynolds agree that landlords are legally required to hold a tenant's deposit in an interest-bearing account with a financial institution, separate from their funds.
“Tenants are entitled to request written proof of accrued interest at any stage of the lease, and the landlord must provide this confirmation. Upon deposit, the landlord should issue a receipt noting the amount, date, tenant’s name, and the relevant property address,” they said.
If a managing agent holds the deposit, it must comply with the Property Practitioners Act, which requires the funds to be kept in a trust account, and for the interest to accrue to the tenant (unless otherwise agreed).
It is recommended that the tenant either takes their own photographs and/or videos during the ingoing inspection, alternatively that they immediately request copies of the ingoing inspection checklist, photographs and videos taken by the landlord (or the landlord’s representative) during the ingoing inspection
— Neil Bensch, senior associate at CK Attorneys
Further, they said failure to do this is not only a breach of the applicable legislation but may open the landlord to legal liability.
“The Rental Housing Act specifies the periods within which the rental deposit plus interest thereon needs to be paid back to the tenant after the lease has expired: within seven days if there are no damages; within 14 days if there are damages and repairs are required; or within 21 days if a tenant refuses a joint inspection,” they said.
The national rentals manager for the Rawson Property Group, Jacqui Savage, said a landlord may hold back part of, or all of, a deposit if there are damages to the property, any outstanding rental, any outstanding utilities, and any costs a tenant is liable for under the lease agreement which they are still owing.
Bensch said it is important that tenants insist on both an ingoing inspection when taking occupation of the property and an outgoing inspection when vacating the property to ensure their deposit is not misappropriated by the landlord.
“It is recommended that the tenant either takes their own photographs and/or videos during the ingoing inspecting, alternatively that they immediately request copies of the ingoing inspection checklist, photographs and videos taken by the landlord (or the landlord’s representative) during the ingoing inspection,” he said.
ASI Properties said if a tenant believes their deposit is unfairly withheld, the first step is to request a detailed written breakdown from the landlord explaining any deductions.
If this is not provided or is deemed unreasonable, the tenant may lodge a complaint with the Rental Housing Tribunal in their province which provides a free dispute resolution service and can summon landlords to hearings.
Ynnis Willson, head of rental and rental management at Jawitz Properties, said the tribunal process typically begins with mediation, where a neutral party attempts to facilitate a resolution.
She said if mediation fails, the matter proceeds to a formal hearing, and the outcome has the same legal standing as a magistrate’s court ruling.
Bensch said should mediation be unsuccessful, or if the tenant does not wish to pursue mediation, they can pursue legal action by filing a claim in the small claims court.
The small claims court handles claims involving disputes under a specific threshold (R20,000) and does not require legal representation, and a commissioner will hear the case and make a binding decision.
He said in rare cases where the deposit amount exceeds the monetary jurisdiction of the small claims court, or if the tenant is dissatisfied with the outcome , the dispute can be escalated to a higher court with the relevant monetary jurisdiction.
This is a more formal process, and typically involves legal representation.
ASI Properties said if the tribunal fails to resolve the issue or if either party is dissatisfied with its ruling, the matter can be escalated to the magistrate’s court.
“It's important that the tenant retains copies of the lease agreement, payment receipts, and any communication with the landlord,” it said.
Willson believes there are clear advantages to working with a professional, experienced rental asset manager for both landlords and tenants.
She said professional management adds an extra layer of accountability, documentation, and expertise that helps prevent misunderstandings and ensures both parties are protected.
Further, she said a rental agent also guides both parties during the lease period (landlord and the tenant) with updated legislation and laws governing processes in the rental space, which may not be applied if they enter into a rental privately without an agent.
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