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Tenants, know your rights when it comes to deposits – and everything else

Both the tenant and landlord/representative property practitioner need to attend the incoming and outgoing inspections. Picture: Ivan Samkov/Pexels

Both the tenant and landlord/representative property practitioner need to attend the incoming and outgoing inspections. Picture: Ivan Samkov/Pexels

Published Jun 11, 2022

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One of the most contentious stages of a lease period is when the lease is terminated, and discussions around the return of the deposit begin, says Paul Stevens, chief executive of Just Property.

Offering insight into how the process is regulated, and what tenants and landlords can do to avoid disappointment, stress and anger, he says the Rental Housing Act governs how deposits and interest earned are handled.

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The Act states that landlords may require tenants to pay a deposit before moving into a dwelling and that such a deposit may not be greater than the deposit amount agreed between the landlord and the tenant. In other words, this amount is a point of negotiation and agreement; it may be led by market norms, the landlord’s appetite for risk, the type of property, the tenant’s credit history, and other factors.

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The Rental Housing Act also dictates that deposits must be invested by the landlord in an interest-bearing account with a financial institution.

“Best practice is to hold the deposit in a dedicated Trust account, independent of the business/landlord’s operating account.”

The Act also states that “the interest rate applicable to such account may not be less than the rate applicable to a savings account with that financial institution”.

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Stevens says tenants can request written proof of how much interest was earned on the deposit while it was in the account, and the landlord needs to show the tenant proof if requested.

“The process and timelines for paying back deposits is addressed in the Rental Housing Act too. It states that deposits must be repaid to the tenant together with any interest accrued to such account on the expiration of the lease. This can be achieved within seven days of the end of the lease if certain conditions are met.”

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Protect yourself from the very beginning

Both the tenant and landlord/representative property practitioner need to attend the incoming and outgoing inspections, the Act states. This way, both parties will be aware of any damages that are placed on record, and if they happened before or after the tenant moved in. This evidence, Stevens says, allows the tenant and landlord representative property practitioner to more easily navigate the common issue of normal wear and tear versus damage to property, whether intentional or not.

“Tenants and landlords should keep copies of the inspection report and date-stamped photographs for their own record and in case other records are misplaced or damaged. These should include things like doors without keys, damp patches, missing light covers, scratches on wood floors, stained carpets, nails in walls, and anything that is broken or might be an issue in the future.”

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He says tenants should also make sure that things like all lights, plugs and stove plates work and remember to record issues with regard to the exterior too. The inspection report should include descriptions for each photograph as it can be difficult to remember details down the line.

“Protect yourself by carefully reviewing the landlord’s or representing agent’s incoming inspection report and associated photographs. Insist that the records be edited if anything has been omitted or misrepresented. Careful attention here will help to avoid future disputes.

“When it’s time for the exit inspection, tenants will have accurate, documented proof of the condition of the property from when they moved in.”

Getting your deposit back

If the property is in tip-top condition and there are no damages, the tenant should receive their full deposit, Stevens says.

“There are milestones at seven and 14 days after the termination of the lease, and then another 14 days after the restoration of a property (if there were damages). If there are outstanding amounts from the tenant, then the landlord can use the deposit to pay for anything such as outstanding rent or utilities and damages to the property.

“Remember, your full deposit is not guaranteed. It is best to have saved up for a new deposit and the first month's rent before terminating your old lease.”

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