Here’s why your landlord wants two months’ rental deposit
You need to find a new rental home and begin your search online. You find the perfect home in the perfect location and enquire with the agent about availability. It’s available, says the agent, and he invites you to come through to view it.
You’re so excited that you decide to go that same evening, with your wife and two children in tow. As you walk through the home you picture your children building Lego in the lounge, your wife painting under the large Acacia tree and the outside shed being a perfect spot to pursue your long-time dream of carpentry.
You’re sold! Rental is listed at R15,000 per month (excluding water and lights), and you feel you can make it work with your budget – you’re already paying R13,000 at your current house, for quite a lot less space.
You’ve kept your current home in great condition and don’t expect any issues when requesting your full deposit back – equal to a single month’s rental of R13,000.
It hits you, slap bang in the face: The security deposit is equivalent to two months’ rental to be paid upfront. This means you will have to pay R45,000 in one month (two months’ worth security deposit and the first month’s rental).
You plead with the agent, saying you have put in notice to vacate and are running out of time to secure a new rental property. Is there no way the landlord will accept payment terms of three or six months to pay off the deposit? The landlord is unwilling to budge. Take it or leave it, he says.
Why is your landlord being so hardegat about this, you wonder? He has been burned before with tenants who defaulted on rent and had to eventually be evicted.
According to the Tenant Profile Network Rental Monitor for Q3 2016, 84.01% of South African tenants are in good standing with their landlords. Flipping this on its head, just short of 16% of tenants are in arrears on their rental payments.
The old standard practice of asking for only one month’s rental as a security deposit is impractical in today’s terms. Consider this: It takes between six weeks and 18 months to evict a tenant in South Africa – depending on whether the eviction is opposed or not.
Tenants who are unable meet their rental obligations and decide to stay put in their landlords’ homes, despite breaking the contract through non-payment, have very little leg to stand on and will have less of a legal defense to oppose eviction.
Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa, says that if the correct procedures are followed, it can take eight to 10 weeks for an eviction order to be granted – though there are many things that can derail even the best laid plans.
During this time the landlord will not receive rental income but will, likely, still have a bond and associated costs to pay (not to mention a water and lights bill).
“The landlord as at the time of an eviction would have already cancelled the lease and the occupant is holding over unlawfully,” says Marlon Shevelew of rental property law firm, Marlon Shevelew and Associates. “Accordingly the deposit held in terms of a lease is no longer the self-same deposit and can be allocated for expenses that the landlord is liable for so long as it related to the property previously lawfully occupied by the occupier.”
The landlord is therefore within his rights to use the security deposit to pay the bond and associated costs and, if the now-unlawful occupiers are evicted in eight weeks, the landlord will not have lost out as big on furnishing his bond repayments and municipal services bill.
“Insofar as eviction proceedings can only be launched against an unlawful occupier and an unlawful occupier in lease terms can only arise if the lease is cancelled, it follows that with no lease in place and the occupant holding over, the deposit can be used as the landlord wishes,” says Shevelew.
Shevelew says costs to evict a defaulting tenant can significantly escalate in the case of an opposed eviction.
“Fees range from R6,000 to R25,000 for an unopposed eviction, and up to R100,000 depending on the court, the province in which it is launched and whether or not it is opposed,” he says, noting that these costs will come out of the landlord’s pocket, though they can be passed on to the tenant.
The price bands in which landlords operate attract vastly different kinds of tenants. TPN’s Q3 2016 Rental Monitor ranks tenants in the R7,000 to R12,000 band as the most consistent payers, while the very bottom and top of the market are deemed the worst tenants in terms of rental payment performance.
The landlord in this story has less to fear because tenants in his price band remain better payers than the national average, but past experience can, and usually does, influence future behaviour.