Guide
Rental deposit interest rules in South Africa
Under the Rental Housing Act, a rental deposit is the tenant’s money held in trust, and it has to earn interest for the tenant. This guide covers how deposits must be held and what has to be paid back.
The deposit must be invested
The Rental Housing Act requires the landlord (or the agent holding it) to invest the deposit in an interest-bearing account with a financial institution. It is not the landlord’s money to use during the lease.
The interest belongs to the tenant
Interest must accrue for the tenant’s benefit, at a rate that is not less than the rate the landlord would have earned on a savings account with that institution. The tenant is entitled to that interest, not the landlord.
Refund timelines at end of lease
Where there is no damage to reconcile, the deposit plus interest is generally refundable within 7 days of the lease ending. Where the landlord makes deductions for damage or amounts owing, the balance plus interest is typically due within 14 days, supported by receipts for the repairs. The tenant can ask for a joint inspection before moving out.
Keeping the accounting straight
You need to be able to show the deposit amount, where it was held, the interest earned and any deductions with proof. A per-tenancy ledger that tracks the deposit and its interest separately from rent makes the end-of-lease reconciliation defensible.
Frequently asked questions
- What interest rate must I pay on a rental deposit?
- At least the rate the deposit would have earned in a savings account with the institution where it is held. You cannot keep the difference between what it earned and a lower rate you choose to pay out.
- How quickly must the deposit be refunded?
- Generally within 7 days of the lease ending if there are no deductions, or within 14 days if there are, with receipts for any repairs deducted. Check the current Act and your lease for the exact wording.
- Can the agent hold the deposit instead of the landlord?
- Yes, an agent can hold it in trust, but the same rules apply: interest-bearing account, interest for the tenant, and proper accounting at the end of the lease.
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