Rental deposits essential if landlords are to be protected

Tenants applying to rent a property are, says Janine Swart, Head of Alexander Swart Property Rentals, one of the faster growing firms in the rental market, quite often dismayed to find that they are expected to pay two, two and a half, three or even four months rentals upfront, i.e. before being allowed to take occupation – and if they do not do this they will be prevented from moving in.

“It is, of course, true,” says Swart, “that rental agreements these days are strict, but this has been found to be essential in order to protect landlords who in the past have lost large sums as a result of unsatisfactory tenants.  Landlords simply have to be protected as much as possible against the non-payment of rentals and damage to the property.”

The money collected as a deposit, says Swart, has, by law, to be invested into a trust account and any interest accrued thereon, paid to the tenant.  At the end of his lease/period of occupation he will be refunded the full amount less any costs for damage caused during his period of occupancy.

If the tenant has looked after the property carefully, says Swart, the amount deducted from the deposit may be quite small because landlords cannot claim for ordinary wear and tear items.

The usual practice, says Swart, is to ask for two months deposit.  Where a three or four month upfront payment is required it is usually because there is some doubt about the tenant’s earnings flow.  If, for example, he has no references from previous landlords or has just started a new business and has not had time to prove its viability, the rental agent is entitled to demand a three or four months rental upfront deposit.  In addition, if the home is equipped with sophisticated, easily damaged (and costly) electronic equipment or other expensive fittings, that, too, might be considered a reason for asking for a bigger deposit, probably in this case two and a half months rental.

Sometimes, says Swart, the tenant will query the sum deducted from the deposit and this can lead to arguments.  However, she says, in all good rental agreements the tenant’s obligations will be clearly defined at the outset and these conditions are usually irrefutable.  For example, the lease agreement might specify that if a home after a year or more of occupancy by a tenant who keeps pets has become impregnated with animal smells, the landlord is allowed to deduct fumigation costs from the refunded deposit.  If the carpets have been stained it will be possible to deduct for a full carpet cleaning service or even in some cases the cost of replacement of the carpets.

Swart says that landlords are quite often unable to manage rental properties successfully.  They are frequently too busy, live too far away from their property, do not know property law and are unable to carry out the necessary credit checks.  They also do not know how to handle a non-paying or difficult tenant.  It is therefore better for the vast majority of landlords to appoint a rental agent with a proven track record, such as Alexander Swart Property Rentals, who last month had 95% of the rentals paid by the due date, while less than 1,5% of tenants were in a defaulting position.