‘Agents should pay back rental deposits with interest’

Namibia Estate Agents Board (NEAB) manager Festus Unengu says real estate agents should pay back tenants’ deposits with interest when they move out of rental properties.

He says tenants should not be forced to pay deposits that are the same amount as their rent.

Unengu recently told The Namibian tenants are legally entitled to get their deposits back with interest when they move out of a rental property.

“This is under the circumstances that there is no damage to the property, not including wear and tear.”

Unengu said deposits should be placed in interest-bearing trust accounts.

“The deposit money is your money, it’s not the landlord’s money,” said Unengu.

He added that tenants have the right to request proof that their deposit is being held in a trust account and what interest rate is being applied.

Unengu advised tenants to ask for this information in writing.

“The estate agent must inform you that you are entitled to that interest,” Unengu said.

“And if you don’t want your interest, then 50% of that interest goes to the Fidelity Fund.”

Unengu said while there has been a trend of agents refusing to pay back deposits for various reasons, the tenant is not responsible for repairs for normal wear and tear.

“Land taxes are the responsibility of the landlord, and wear and tear is the responsibility of the landlord. For example, you use the stove or the lights you switch on and off everyday, so the element gets broken, those are not your responsibilities. It is the landlord’s responsibility to maintain and to keep the property in a condition that is fit for human habitation. Yours is to keep it clean and tidy and to pay rent,” said Unengu.

He added that a landlord cannot force a tenant to pay property taxes through a contract clause.

The law dictates that such expenses are the landlord’s responsibility.

This principle applies to deposit deductions as well.

Landlords and agents cannot use the deposit to cover anything beyond the tenant’s responsibility, which is typically limited to repairs for damages exceeding normal wear and tear.

Unengu also highlighted the importance of trust accounts for property practitioners.

“Every property practitioner must maintain two separate accounts – a business account for their operational expenses and a trust account to hold client deposits,” said Unengu.

Real estate agent Gabriel Heita says landlords are not aware that the deposit should be kept by the agent in a trust account and not given to the landlord.

According to Heita, this usually leads to the landlord paying the tenants’ deposit as commission for the real estate agent.

“The issue is with the landlord, they are not aware that they are supposed to give the first month’s payment as the agent’s commission, and that the deposit should be kept by the agent in the trust account,” says Heita.

He added that sometimes landlords take the deposits and use it for themselves.

Although the NEAB has conducted induction training for all the real estate agents, some still do not communicate the fact that interest should be paid back with the initial deposit.

“Through the training, agents were advised that the interest accumulated from the deposits should be paid back to the tenants. Real estate agents, however, do not communicate this to the tenants,” says Heita.


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