By Sanette Viljoen of SV Legal
Question: I own a house on the Natal coast. This house is rented out on a monthly basis with the help of an estate agent. On 01 January 2021, new tenants moved into the house. They paid a deposit equal to two months’ rent, together with the rent for January. I was surprised when a much smaller amount was paid into my account by the estate agent. It became evident that the agent had claimed his 10% commission on the total amount paid in by the tenant, in other words, the agent claimed 10% on the deposit as well. May commission be claimed on the rental deposit?
The answer is simply no. No agent may claim commission on the rental deposit. The deposit received at the beginning of a rental agreement may not be used by the landlord/real estate agent.
So, what should happen with the tenant’s deposit after he made the payment?
This is defined in section 5(d) of the Rental Housing Act (No. 50 of 1999), which determines that the landlord must invest the deposit in an interest-bearing account with a recognised financial institution. Any interest earned on the deposit belongs to the tenant.
If the property is managed by a real estate agency, the deposit must be protected and invested in terms of the Estate Agency Affairs Act (No. 112 of 1976).
This deposit must be repaid to the tenant at the end of the rental term, together with the interest earned on the deposit, after the deduction of any damages. In other words, no commission may be claimed on this amount.
If your agent deducted commission from the tenant’s deposit, you, the landlord, is definitely entitled to take it up with the agency and to request that the commission be refunded to you so that you may invest it. If the agency fails to do so, you can sue the agency for the refund of the deposit.