Coming up with rental deposits a common concern for tenants aged 30 to 59

The TPN Credit Bureau Tenant Survey report for 2024 reveals that financial barriers are the reasons for most tenants choosing to rent rather than buy, along with flexibility and political uncertainty. TPN is a credit bureau that tracks tenant behaviour and develops rental payment profiles.

Almost 10% – 9.9% – of more than 170,000 tenants surveyed could not buy property due to poor credit records, while 48% simply can’t afford to buy property. However, the rental deposit requirements mean that tenants need to have a nest egg – unless they are simply transferring a rental deposit from one lease to another as they move.

Waldo Marcus, industry principal at TPN, who authored the report, says funding a deposit proved to be a common challenge across age groups from 30 to 59.

A rental deposit is the money a tenant pays upfront to the landlord and can be used to cover the cost of any damages when the lease is over. 

Samuel Seeff, chairman of the Seeff Property Group, says landlords must invest the deposit in an interest-bearing account and repay it to the tenant with interest at the end of the lease – after deducting costs for any damages.

Daily Maverick spoke to FNB, Seeff and Pam Golding Properties. The consensus seems to be that most landlords request a security deposit equal to one or two months’ rent. However, a landlord can request a deposit equal to two months’ rent and the first months’ rent upfront – which means if you want to rent a property for R10,000 a month, you would need to put down R30,000 upfront.

Attorneys Pagel Schulenberg point out that according to the Rental Housing Act, rental deposits should not be more than two months’ rent for unfurnished properties and three months’ rent for furnished properties.

Seeff says the deposit can also be retained if the tenant is in arrears with rent. Before damages can be deducted, the landlord or rental agency is supposed to inspect with the tenant. The results of the inspection have to be compared with the inspection that was done before the tenant moved in. 

“Only provable and approved damages can be deducted. If the tenant is dissatisfied, they can lodge a complaint with the Rental Housing Tribunal,” Seeff says. 

Seeff says its clients usually have cash available for their deposits. Cindy de Beer, Pam Golding Properties’ rentals manager in the Gauteng metro, says deposits are often funded from savings and salaries or previous deposits from the tenant’s current rental. 

“We also have had situations where the tenants requested to pay off the deposit over three months,” she says.

According to the TPN Tenant Survey, 37.8% of tenants prefer to take on a longer lease with no deposit requirements.

The survey notes that while deposits offer investors and managers some security, they are a barrier for tenants and prospective tenants, especially in the lower rental value bands.

“Alternative solutions like deposit insurance is a relatively new trend which has appeared in recent years to assist tenants and investors alike in navigating the need to manage, collect, and provide security deposits,” the report states.

In terms of price bands, TPN estimates the “sweet spot” in terms of demand vs supply of rental homes as the R12,000-R25,000/month rental band, with the highest demand vs supply rating and the lowest vacancy rate of its rental bands.

Rental market buoyant – except for Gauteng