Can I Request a Damage Deposit, and How Much? A Guide for South African Landlords

When renting out property in South Africa, one of the most essential protections for landlords is the damage deposit. It serves as a financial safety net to cover unpaid rent, damages beyond fair wear and tear, or other costs that the tenant is responsible for upon lease termination.

However, South African law does not give landlords unlimited freedom to demand or use this deposit as they see fit. The Rental Housing Act sets clear rules on whether, how much, and how a damage deposit can be requested and managed.

This comprehensive guide explores what a damage deposit is, why it’s important, the amount landlords can legally request, and how the law requires deposits to be managed. We will also examine best practices for managing damage deposits to prevent disputes and ensure compliance with South African rental law.

What Is a Damage Deposit?

A damage deposit (often called a “deposit”) is a sum of money paid by the tenant to the landlord before or when moving into the rental property.

It is not a fee or an extra charge for profit. Instead, it acts as security for the landlord against:

• Unpaid rent at the end of the lease.
• Utilities or charges that the tenant fails to pay.
• Costs of repairing damage beyond fair wear and tear.

Essentially, it serves as a safety buffer to ensure that the tenant fulfils their obligations under the agreement and returns the property in good condition.

Is Requesting a Deposit Legal?

Yes. South African landlords are fully entitled to request a damage deposit from their tenants. The right to request a deposit is recognised explicitly in the Rental Housing Act.

It is a standard industry practice for almost all residential leases in South Africa to include a deposit requirement.

However, the law also places critical limits and responsibilities on landlords:

• How much can be asked for?
• How the deposit must be kept.
• How and when it must be refunded.
• What can it be used for legally?

Landlords who fail to comply with these requirements risk legal action, penalties, and disputes with their tenants.

Why Request a Damage Deposit?

For landlords, the deposit is essential for managing risk. It:

• Provides financial security in the event a tenant damages the property.
• Ensures landlords have funds to cover unpaid rent.
• Encourages tenants to take care of the property.
• Reduces the likelihood of costly disputes upon lease termination.
• Improves cash flow management when turning over a property between tenants.

In the absence of a deposit, landlords may face significant costs to repair damage or chase tenants for unpaid rent.

How Much Can a Landlord Request?

One of the most common questions landlords have is:

“How much deposit am I legally allowed to ask for?”

Unlike some countries that impose strict caps (for example, one month’s rent), South African law does not set a specific maximum amount in the Rental Housing Act.

Instead, the law requires the amount to be:

✅ Reasonable.

✅ Agreed upon between the the landlord and the the tenant in the lease.

In practice, the industry standard for residential leases in South Africa is:

• One month’s rent for unfurnished properties.
• Two months’ rent (sometimes more) for furnished properties.

Landlords may negotiate for higher deposits, especially for furnished or high-value properties, but the key is that the amount must be reasonable and agreed upon in writing.

Factors Affecting the Deposit Amount

When deciding what deposit to request, landlords should consider:

• Type of property (furnished or unfurnished).
• Monthly rental amount.
• Value of included fixtures and fittings.
• Tenant’s risk profile (for example, first-time renter vs long-term corporate tenant).
• Market norms in the area.

Charging an excessive deposit that is out of line with market practice may be challenged as an unfair practice under the Rental Housing Act.

Must the Deposit Be in the Lease?

Yes. The amount of the deposit and the conditions under which it will be held and refunded must be set out in the lease agreement.

A well-drafted lease will specify:

• The deposit amount.
• When it is payable (typically before or on occupation).
• It will be held in an interest-bearing account.
• The purposes for which it may be used.
• The refund process and timeframes.

Without this, landlords may face difficulty enforcing deposit-related claims.

Holding the Deposit: The Legal Requirements

South African law sets strregardingules regarding how landlords must hodepositsge deposits.

According to the Rental Housing Act:

✅ The deposit must be placed in an interest-bearing account with a financial institution.

✅ The interest accrued on the deposit belongs to the tenant.

✅ The landlord must disclose to the tenant:

• The bank or financial institution where the deposit is held.
• The interest rate is applicable.

This is not optional.

Why?

The law aims to protect tenants from landlords misusing deposits as extra income or spending them before the lease ends.

Interest on Deposits

A landlord cannot simply hold the deposit in a non-interest-bearing account or keep the interest for themselves.

• The interest earned must accrue to the tenant.
• On a refund, the landlord must pay the original deposit plus interest.

This requirement applies regardless of the lease duration—even if the tenancy is only a few months long.

Can a Landlord Use the Deposit During the Lease?

No.

The deposit remains the tenant’s property until itwfu of the leaselly applied at the lease end.

Landlords cannot:

• Spend the deposit on personal expenses.
• Use it for ongoing maintenance during the lease.
• Apply it to rent unless the tenant agrees (for example, by writing off the last month’s rent with the deposit).

Misusing the deposit can lead to Rental Housing Tribunal action and legal orders to repay the funds with penalties.

The Outgoing Inspection

A critical part of using the deposit lawfully is the outgoing inspection.

South African law requires landlords to:

✅ Arrange a joint outgoing inspection with the tenant at the lease end.

✅ Inspect at a mutually convenient time.

✅ Record any damage beyond fair wear and tear.

✅ Compare the property’s condition with the ongoing inspection report.

If the landlord fails to conduct this inspection, they may lose the right to claim damages from the deposit.

What Can Be Deducted from the Deposit?

Landlords can only deduct costthe tenant lawfully owes. These include:

• Unpaid rent at the end of the lease.
• Utilities or municipal charges that the tenant is responsible for but did not pay.
• Repairs for damage beyond fair wear and tear.

Fair wear and tear cannot be deducted. Examples include:

✅ Minor scuff marks on walls.

✅ Light carpet wear for everyday use.

✅ Faded paint.

Damage that may be deducted includes:

✅ Holes in walls.

✅ Broken windows.

✅ Stains from negligence.

Process for Using the Deposit

The Rental Housing Act sets out the process:

1️⃣ . Conduct the outgoing inspection with the tenant.

2️⃣ . Identify damages beyond fair wear and tear.

3️⃣ Obtain quotes or invoices for repairs.

4️⃣ Provide the tenant with an itemised written account of deductions.

5️⃣ . Refund the balance of the deposit (plus interest) within the timeframe.

Timeframes for Refund

By law, landlords must refund the deposit plus interest within:

✅ 7 days if there are no deductions.

✅ 14 days if there are deductions after completing repairs or paying costs.

Failing to do so can result in:

• Complaints to the Rental Housing Tribunal.
• Orders for repayment plus interest.
• Potential legal costs.

Tenant Rights Around Deposits

Tenants have legal rights to:

✅ Attend both ingoing and outgoing inspections.

✅ Receive full disclosure of where the deposit is held.

✅ Earn interest on the deposit.

✅ Receive an itemised account of any deductions.

✅ Have the deposit refunded within the legal timeframe.

Landlordbeing subject to binding ordersrisk being subject to binding orders from the Tribunal.

Best Practices for Landlords

To avoid disputes and stay compliant:

• Always use a written lease that includes clear deposit terms.
• Set a reasonable deposit amount.
• Place the deposit in aMaintainn interest-bearing account immediately.
• Maintain complete earned records of deposit payments and interest earned.
• Conduct joint inspections and document the property’s condition with photos.
• Provide receipts and invoices for any deductions.
• Refund the balance on time with interest.

Professional management of deposiestablishduces risk and helps es andablish a reputation as a fair and reliable landlord.

Penalties for Non-Compliance

Landlords who fail The to comply with deposit laws face serious consequences:

• Rental Housin,g Tribunal can order the full repayment of the deposit, plus interest.
• The tribunal may impose administrative penalties.
• Courts can enforce orders, potentially withthe imposition of  costs.
• Damage to the lanbecoming dlord’s reputation in the market.

Tenants are beare more coming increasingly aware of their rights and are more willing to enforce them.

FAQs

Is the deposit amount negotiable?

Yes. It must be agreed between the landlord and the tenant and recorded in the lease.

Can I ask for more than one month’s rent as a deposit?

Yes, if reasonable and agreed. Furnished properties often require two months’ rent in advance.

What if the tenant refuses to pay the deposit?

You can refuse to hand over keys or allow occupation until the deposit is paid.

Do I have to tell the tenant where the deposit is kept?

Yes. The law requires you to disclose the bank and interest rate.

Can I keep the interest earned?

No. The interest belongs to the tenant.

What if I didn’t do an outgoing inspection?

You may lose the right to claim damages beyond fair wear and tear.

Can I use the deposit for unpaid rent during the lease?

Only if the tenant consents. Otherwise, it’s held until the lease ends.

Useful External Links

• www.gov.za/documents/rental-housing-act
• Official Rental Housing Act text.
• www.justice.gov.za
• Department of Justice resources on landlord-tenant disputes.
• www.westerncape.gov.za/service/rental-housing-tribunal
• Provincial Rental Housing Tribunal guidance.
• www.saflii.org
• South African Legal Information Institute – landlord-tenant case law.
• www.cgt.org.za
• Consumer Goods and Services Ombud – tenant rights under the CPA.

Mr Sajjad Ahmad, the CEO of the Landlord Association of South Africa, said:

” All countries are affected by the US tariffs, some more than others. Europe is in trouble due to the tariffs. With threats of nuclear war, South Africa is likely to be the country foreign investors will want to park their wealth. We are already seeing an influx of wealthy investors coming to South Africa.”

Membership with the South African Landlords Association provides access to expert advice, legal resources, and a community of like-minded professionals.

Enhance your rental management experience and protect your investments by joining today!

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