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PPRA trust account rules: what letting agents must actually do

If your agency collects rent or holds deposits, the Property Practitioners Act treats that money as trust money — and the rules around it are the ones most likely to end a rental agency. Here is what section 54 actually requires, what the annual audit involves, and when you can legitimately get out of running a trust account at all.

First: no fidelity fund certificate, no business

The Property Practitioners Act 22 of 2019 (in force since 1 February 2022, replacing the old Estate Agency Affairs Act) starts from a blunt position. Section 48 prohibits anyone from acting as a property practitioner without a valid fidelity fund certificate (FFC) from the Property Practitioners Regulatory Authority — and for a company, every director needs one too, not just the firm. Rental agents are squarely inside the definition of property practitioner: collecting rent, managing lettings and holding deposits all count.

Section 56 gives that prohibition teeth where it hurts. A practitioner who was not in possession of a valid FFC at the time the work was done is not entitled to remuneration for it. Lapsed certificate in March, collected commission in April? That commission is not legally yours, and money received while unlicensed can have to be repaid. Before worrying about trust account mechanics, confirm that the firm's FFC and every individual FFC in the business are current. Everything else in this guide assumes they are.

What section 54 requires

Section 54(1) requires every property practitioner to open and keep one or more separate trust accounts with a bank, and the account itself must contain a reference to section 54(1). That reference matters: it is what tells the bank the money is trust money, held for your clients, and not an asset of the agency. Rent collected on behalf of landlords, tenant deposits you hold, and any other money you receive in the course of a mandate that does not yet belong to you — all of it goes through this account.

You must notify the PPRA of the account's details, and appoint an auditor for it. The trust account is not a suggestion for firms above a certain size; it applies from the first rand of trust money you receive.

Section 54(2) allows a separate interest-bearing savings or investment account — again with the section reference in the account name — typically used for tenant deposits, which under the Rental Housing Act must earn interest for the tenant. Keeping deposits in a 54(2) account and the monthly rent float in the 54(1) account is the cleanest structure for a letting business, because deposit interest is tenant money and rent-roll interest is not.

On interest: you may not solicit or influence anyone entitled to trust funds to pay interest over to you, and who the interest belongs to must be recorded in a written agreement. Do not treat trust interest as quiet revenue. If your mandate is silent on interest, fix the mandate.

The operating discipline, month by month

The Act and the PPRA's audit guideline require separate trust accounting records for every transaction, balanced monthly, with records retained for at least five years. In practice a letting agency that stays out of trouble does three things without fail:

Reconcile monthly. The trust bank balance must equal the sum of what you owe every trust creditor — each landlord's undisbursed rent, each tenant's deposit, every unallocated receipt. If the bank balance is higher than the creditors list, you have unidentified money; if lower, you have a shortfall, which is the single fastest route to losing your FFC.

Never let the business borrow from trust. Paying the office rent from the trust account "just until Thursday" is a trust deficit, however brief. Commission only moves from trust to business once it is actually earned and accounted for — invoiced against a specific landlord's rent receipt, not swept across as a round number.

Keep the audit trail per creditor. An auditor will not accept a spreadsheet showing one blended balance. You need a ledger per landlord and per tenant deposit, showing every receipt, disbursement and fee, reconciling individually and in total.

The annual audit

Trust accounts must be audited every year, and the audit report submitted to the PPRA within six months of your financial year end — an extension from the four months the old Act allowed, but still tighter than it sounds if your records need reconstruction first. Reports filed late attract daily penalties, with a substantial further fine if the report remains outstanding months after the deadline, and non-submission puts FFC renewal at risk. The audit is of the trust accounts specifically; your business accounts are dealt with according to your entity's ordinary financial reporting requirements.

The practical implication: the audit is cheap and quick if your monthly reconciliations exist, and expensive and dangerous if the auditor has to build the year from bank statements. Auditors charge for reconstruction, and what reconstruction tends to find is the shortfall you did not know about.

When you can skip the trust account: the section 23 exemption

The Act introduced a route the old regime never had. Under section 23, a business property practitioner can apply to the PPRA for exemption from keeping a trust account. The recognised grounds relevant to rental agencies are that the firm has never received trust money, no longer receives trust money, or has mandated a payment processing agent — itself a registered business property practitioner holding a valid FFC and running a compliant, annually audited trust environment — to receive and disburse all trust money on its behalf.

Two things trip agencies up here. First, the exemption is not automatic: qualifying is not the same as being exempt. You must apply and be issued an exemption letter, and the exemption only operates from the effective date on that letter. Second, the exemption does not remove your responsibility to your clients — it moves the trust environment to the processing agent, so their compliance becomes your due diligence problem. Ask for their FFC and their audit status before signing, not after.

For a small agency the exemption route can be entirely rational: no bank charges on a trust account, no trust audit fee, no reconciliation burden. The trade-off is margin paid to the processor and dependence on their systems. For agencies at a scale where the processing fees exceed the cost of doing it properly in-house, running your own section 54 account with real double-entry records is usually the better economics.

Where letting agencies actually get caught

The recurring failures are mundane, not exotic: an FFC that lapsed at renewal while the agency kept collecting commission; deposits held in the business current account because "we only manage a few units"; commission swept from trust before the rent that funded it had cleared; a December reconciliation done in May, discovering a tenant refunded twice; and audit reports filed late because the bookkeeper left and nobody owned the deadline. None of these require dishonesty — only inattention. The Act does not distinguish.

If you hold tenant deposits, the interest owed back to the tenant compounds quietly over a multi-year lease. Our free deposit interest calculator shows what a deposit should have earned over the tenancy — a useful sanity check before a refund.