How rental deposits work under the Rental Housing Act

Under the Rental Housing Act 50 of 1999, a deposit is the tenant's money held in trust, not the landlord's money held in advance. The Act sets out where it must be kept, what must happen before the tenant moves in, and how quickly it must come back. Most deposit disputes are lost by landlords who skipped one of those steps.

The deposit must earn interest for the tenant

A landlord who takes a deposit must invest it in an interest-bearing account with a financial institution, earning at least the rate applicable to a savings account. The interest belongs to the tenant, not the landlord.

The tenant is entitled to ask for written proof of the interest earned, and the landlord must provide it. In practice this is one of the most commonly ignored provisions in South African residential letting, and it is an easy point for a tenant to raise at the Rental Housing Tribunal.

The incoming inspection is the whole case

Before the tenant moves in, the landlord and tenant must jointly inspect the property to record any existing defects or damage. This is not a formality. It is the document that later decides whether a mark on a wall was caused by this tenant or was already there.

Do it properly: walk through together, write down every defect, photograph everything including the things that are fine, and have both parties sign and date it. Attach it to the lease.

If a landlord fails to carry out the incoming inspection, the law treats the property as having been handed over in good condition. That presumption is very difficult to argue against afterwards, and it is why a skipped inspection usually means the deposit comes back in full whatever the state of the place.

The outgoing inspection

At the end of the lease, the landlord and tenant must inspect the property together within the three days before expiry, to check for damage caused during the tenancy — as distinct from fair wear and tear, which the tenant is never liable for.

Fair wear and tear is the deterioration you would expect from ordinary living: carpets thinning along a walkway, paint dulling, a hinge loosening. Damage is different in kind: a burn in the counter, a cracked basin, a hole in a door.

The refund deadlines

The Act sets three different timeframes depending on what happens:

• No damage: the deposit plus interest must be refunded within 7 days of the lease expiring.
• Damage to repair: the landlord may deduct the reasonable cost of repairs and must refund the balance, with receipts available to the tenant, within 14 days of the property being restored.
• Tenant fails to attend the outgoing inspection: the landlord must inspect within 7 days of expiry and refund any balance within 21 days of expiry.

Deductions must be supported by actual costs. A landlord cannot deduct a round figure because the place "needed a clean" — the tenant is entitled to see what was spent.

A deposit is not a penalty fund and it is not the last month's rent. It is security against damage and breach, held in trust, and it is returned unless there is a documented reason not to.

What a landlord may never do

Whatever the state of the arrears, a landlord may not lock a tenant out, remove doors or windows, seize the tenant's possessions, or disconnect water or electricity to force payment. These are unlawful, and doing any of them tends to convert a strong arrears case into a losing one.

Recovery of arrears and eviction go through the Rental Housing Tribunal or the courts. Eviction specifically requires a court order under the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act. There is no lawful shortcut.

Practical checklist for landlords

• Put the deposit in a separate interest-bearing account on day one, not in your current account
• Do the joint incoming inspection before handover and photograph everything
• Attach the inspection report and, for a furnished letting, the inventory to the lease
• Diarise the outgoing inspection for the three days before the lease ends
• Keep every invoice for repairs you intend to deduct
• Refund within the applicable deadline, with a written reconciliation

If that sounds like more administration than you want to carry, it is exactly what our rental management service handles, from the incoming inspection to the final reconciliation.