WHY A DEPOSIT IS IMPORTANT

Experts respond to questions such as why landlords should protect themselves from potentially defaulting tenants and tenants who might damage their property

Selling or buying property can come with significant risks, so get experts on your side. PICTURE: @shisuka

Q: I AM a new landlord and was thinking of not asking for a rental deposit to help tenants. What is its main purpose?

A: A rental deposit exists largely to protect the landlord against defaulting tenants and the lengthy, expensive process that is involved to evict them. If the correct eviction procedures are followed, it can take eight to 10 weeks for an eviction order to be granted, during which time the landlord is out of pocket. Besides the fact that the landlord is not getting a rental income from the defaulting tenant during that period, they will also have to pay legal costs. An unopposed eviction could cost between R12 000 and R20 000 in legal costs plus disbursements, while the cost of an opposed matter will be substantially more. – Adrian Goslett, chief executive of Re/Max of Southern Africa

Q: What is the best rental deposit amount to ask for and is there anything specific that I must do with it before needing to return it at the end of the tenancy?

A: Conventionally, the rental deposit amount is equal to anywhere from one to even three months’ rent. When a tenant pays the deposit, the landlord is required by the Rental Housing Act to place the money in an interest-bearing account held with a financial institution. The tenant is within their rights to request a statement of the interest earned on the money at any time during their tenancy. Even though the deposit is paid to the landlord, it remains the tenant’s money. The landlord is merely holding the money as a security measure, should the tenant default or breach the rental agreement. If the tenancy runs its normal course, the deposit, along with all interest earned on the money, must be repaid to the tenant at the end of the lease period. The landlord is entitled to deduct from the deposit any expenses incurred repairing any damage to the property which occurred during the tenancy. – Adrian Goslett, chief executive of RE/MAX of Southern Africa

Q: Apart from having my home ready for potential buyers to view, what else must I have in place to ensure that the sale is concluded smoothly?

A: Certain compliance aspects are regulated by law, such as plumbing and electrical. Some municipalities have additional requirements, such as a beetle certificate. The banks also require compliance certificates when a mortgage loan is needed. Significant delays can be caused when sellers do not have approved plans. When the submission of the plans becomes a condition of the sale of the property, or a pre-registration condition of the buyer’s bank, which is an increasingly frequent situation, irregularities are detected that could ultimately result in the cancellation of a transaction. There may also be additional compliance issues unique to the particular municipal area or property type that need to be dealt with, such as a gas installation certificate of conformity, electric fence certificate, regulations relating to the safety of swimming pools or a lightning conductor on thatched properties. – Gerhard van der Linde, managing director of Seeff Pretoria East.

Q: I keep hearing about retiring in a life rights property but am not entirely sure what that means. What is the difference between buying a property normally and a life right?

A: Life rights is the ideal option for those who would prefer to leave the challenges and costs associated with house ownership, maintenance and sale to others while still maintaining their lifestyle. Essentially, it affords the retired individual the right to occupy a unit in a lifestyle estate for the remainder of their life while ownership of the property is retained by the developer. This “right” is paid for with a capital investment and on relocation or death the unit is ceded back to the development, usually for the initial invested price, and this payment becomes part of the deceased estate. With a life right comes a list of continuous services as the developer doesn’t bow out upon completion as happens with freehold and sectional title retirement schemes. Retirees who have less capital to invest will benefit from the lower-cost investment which affords them a lot more house and services for their money than any other form of purchase and tight monthly budgets will also be eased by lower levies as all maintenance costs are covered by the development. – Lisa Stredder, retirement property specialist for Lew Geffen Sotheby’s International Realty in the Winelands

Q: I know that price is absolutely crucial in when selling a house, so how can I be sure my home is priced right?

A: A well-priced property will have a buyer waiting and you do not have to be offering the cheapest property on the market to achieve a quick sale. Rather, it needs to be well priced in comparison with similar properties. Do your research with regards to what else is out there, and at what price, and ask your agent to guide you. – Alexa Horne, managing director Dogon Group Properties