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Guide

Rental deposits under the Rental Housing Act

Deposit disputes are the single biggest source of Rental Housing Tribunal complaints, and most of them are lost on procedure, not on the merits. The Rental Housing Act 50 of 1999 sets out exactly how a deposit must be held, what may be deducted, and three different refund deadlines. Miss the procedure and you can forfeit deductions you were otherwise entitled to make.

Holding the deposit: whose interest is it?

Section 5(3) of the Act requires the landlord to invest the deposit in an interest-bearing account with a financial institution, at a rate no worse than that institution's savings account rate. The interest belongs to the tenant, and the tenant may demand written proof of the interest earned at any point during the lease. If your agency cannot produce that statement on request, fix that before anything else in this guide — it is the easiest complaint for a tenant to win.

Where a letting agent holds the deposit, it goes into the agency's trust account under section 54 of the Property Practitioners Act 22 of 2019, and the position changes: interest on general trust monies accrues to the PPRA Fidelity Fund unless there is a written mandate directing the agent to invest the funds in a separate interest-bearing account for the tenant's benefit. The clean way to reconcile this with the Rental Housing Act's promise of interest to the tenant is to put that mandate in writing — in the lease or the agency's mandate agreement — and hold each deposit in an interest-earning trust investment. An agency that pools deposits in a non-earning trust account and stays silent on interest is inviting a dispute it will struggle to defend.

Either way, the deposit is trust money, not working capital. It must be identifiable, reconciled per lease, and untouched until the lease ends or a lawful deduction arises. If you run a trust account, your auditor will look for exactly this. (For the wider trust-account regime, see our guide on PPRA trust account rules.)

The two inspections that decide everything

The Act ties the right to deduct to two joint inspections, and this is where landlords most often lose.

The incoming inspection, under section 5(3)(e), happens before the tenant moves in. Landlord and tenant jointly inspect the property and record existing defects. That record — dated, signed, ideally photographed — is the baseline every later deduction is measured against. Without it, "the tenant damaged the geyser cupboard door" is your word against theirs, and the Tribunal tends to resolve that against the party who skipped the statutory step.

The outgoing inspection, under section 5(3)(f), must happen at a time mutually convenient to both parties, at least three days before the lease expires. The sequencing matters: it is the landlord's job to arrange it. If the landlord fails to invite the tenant to a joint outgoing inspection, the Act treats that as an acknowledgement that the property is in good order — the landlord loses the right to deduct anything and must refund the deposit plus interest in full. There is no arguing the damage afterwards; the procedural failure is decisive.

If instead the tenant fails to respond to the landlord's request, the landlord may inspect alone within seven days of the lease expiring and may still deduct — the tenant's non-cooperation shifts the timeline but does not create a windfall.

What may be deducted

The deposit and its accrued interest may be applied to amounts the tenant owes under the lease: arrear rental, utility charges the lease makes the tenant's responsibility, and the reasonable cost of repairing damage beyond fair wear and tear. Fair wear and tear is not deductible — repainting because a tenant lived there for three years is maintenance, not damage.

Every repair deduction must be backed by a receipt, and the Act requires those receipts to be available for the tenant to inspect. Quotes are not receipts. An agency that deducts against an estimate and never produces the invoice has an indefensible file if the tenant refers the matter to the Tribunal.

The three refund deadlines

The Act sets three distinct deadlines, and which one applies depends on how the tenancy ended.

If there are no deductions, the full deposit plus interest must be refunded within seven days of the lease expiring. If a joint outgoing inspection was held and lawful deductions are being made, the balance must be refunded within fourteen days of the property being restored to the landlord, together with a breakdown of the deductions and the receipts behind them. If the tenant failed to respond to the inspection request, the refund (less lawful deductions) is due within twenty-one days of the lease expiring.

Seven, fourteen and twenty-one days are short. An agency that waits for the owner to "have a look at the property" before releasing funds will routinely breach them. Build the exit inspection, the repair quotes and the owner's sign-off into the notice period, not after it — by the time the tenant hands back the keys, you should already know what the deduction schedule looks like.

Where disputes go

A tenant who believes a deposit has been wrongly withheld can lodge a complaint with the provincial Rental Housing Tribunal at no cost, and Tribunals deal with deposit matters constantly. A ruling by the Tribunal has the effect of a magistrate's court order. The practical defence is unglamorous: a signed incoming inspection report, a timeous invitation to the outgoing inspection, receipts for every deduction, an interest statement, and a refund inside the applicable deadline. Agencies that can produce that bundle on demand almost never end up at the Tribunal at all.

If you want to know what a deposit should have earned over a tenancy, our deposit interest calculator works it out year by year.