What happens to your rental deposit? Must interest be paid when it is refunded?
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GUEST – Eunice Sibiya - Educator & Coach on Personal Financial management:
Renting an apartment or a house is commonplace. In most cases a deposit is required before you may occupy the property. This deposit is refunded to the lessee on termination of the lease. Must the lessor pay the lessee interest on that deposit? The position in South Africa is spelled out very clearly in the Rental Housing Act (Act 50 of 1999).
This act makes it very clear that any lessor is obliged to invest the deposit at the commencement of the lease. The Act specifically stipulates that the deposit must be invested in an interest-bearing account at a financial institution. The interest earned may not be lower than the interest rate that will normally be earned on a savings account at that bank or financial institution.
Renting an apartment or a house is commonplace. In most cases a deposit is required before you may occupy the property. This deposit is refunded to the lessee on termination of the lease. Must the lessor pay the lessee interest on that deposit? The position in South Africa is spelled out very clearly in the Rental Housing Act (Act 50 of 1999).
This act makes it very clear that any lessor is obliged to invest the deposit at the commencement of the lease. The Act specifically stipulates that the deposit must be invested in an interest-bearing account at a financial institution. The interest earned may not be lower than the interest rate that will normally be earned on a savings account at that bank or financial institution.
