According to Section 5 of the Rental Housing Act of 1999, a landlord is legally entitled to request a deposit from their tenants. As such, in landlords today usually request a deposit from their tenants before they move into the property. The price of deposit must be specified in the lease agreement. The general practice is to pay an amount equal to one month’s rent as deposit.
In more recent years, landlords have begun asking for two months’ rent as a deposit, due to defaulting tenants and the lengthy process of evicting a tenant in default. Tenants are protected by the Prevention of Illegal Eviction from Unlawful Occupation of Land Act (PIE Act). It can take from eight to ten weeks for an eviction order to be granted during which time the landlord is out of pocket.
The Rental Housing Act also the landlord to place the tenant’s deposit money into an interest-bearing account, held with a financial institution. Although the deposit is paid to the landlord, it remains the tenant’s money; the landlord merely holds the money as a security measure in case the tenant defaults or breaches the rental agreement.
The tenant has the right to request a statement of interest earned on his/her money at any time. At the end of the lease agreement period, the tenant is permitted to receive the deposit and all interest earned on the money over the period in which it was held.
The landlord has the authority to deduct from the rental deposit any expenses incurred repairing any damage to the property that occurred during the lease period. According to the Act, the remainder of the money must then be refunded to the tenant no later than two weeks after the restoration of the property.
The landlord is not entitled to use the deposit for general maintenance or upkeep of the property. The tenant has the right to see all repair receipts to confirm what was actually spent to the property, to repair the tenant’s damage. It there is no damage to the property, the full deposit and interest must be paid to the tenant within one week of the lease’s expiration date.
If a dispute occurs between landlord and tenant regarding the rental deposit, they can turn to the Rental Housing Tribunal. The tribunal informs landlords and tenants of their rights and obligations; it also helps to mediate and resolve disputes between the parties.
Before entering into a rental agreement, tenants should familiarise themselves with their legal rights regarding a lease and their rental deposit. Knowledge of the relevant procedures can help prevent future unpleasant and expensive disputes.