Is the security deposit nothing but a big scam for landlords?

For several decades now, it has been common practice for most landlords to require new tenants to make a security deposit worth one month’s rental fees before moving into their property.  

Security deposit, for those who have never rented, is a specified amount of money a landlord requires a tenant to pay to be used for repairs in case the tenant damages the property during their stay. While the standard is at least one month’s rent others ask for much more than that. 

This security month deposit as it is popularly known, was even incorporated in the Landlord and Tenant Act, 2022 that was passed last April. 

Landlord and Tenant Act, 2022 
According to the new law, government allows all landlords to require tenants to deposit an amount worth one month of rent to cater for repairs upon vacating property. This protects landlords from losing money on repairing poorly kept rental properties.  
Article 30 of the new law, titled ‘Security deposit’, stipulates all the conditions of the security month as follows:

Security deposit
(l) A landlord shall require a tenant to pay a security deposit for the purposes of securing the performance by the tenant of his or her obligations under a tenancy.
(2) A landlord shall not require more than one security deposit or require the payment of, or receive, under a security deposit, an amount exceeding the rent payable for one month’s occupancy of the premises to which the agreement relates or one-twelfth of the rent for one year’s occupancy of the premises to which the agreement relates, whichever is the lesser.
(3) The landlord shall specify to the tenant in writing the terms and conditions under which the security deposit or any part of it may be withheld by the landlord upon termination of the tenancy.
(4) Without limiting the general effect of subsection (3), a security deposit shall not be withheld on account of normal wear and tear resulting from ordinary use of the premises.
(5) The landlord shall provide the tenant with a written receipt for the security deposit.

Is the law being abused?
The practice of requiring tenants to pay an insurance cover in the form of ‘security month’ is now becoming the norm. According to Alex Mubangizi, a broker in Katale off Entebbe Road, landlords that never used to ask for the security month are now starting to ask for it.

“In my experience, the only landlords that traditionally asked for security month were those that owned properties worth about Shs400,000 in monthly rent. Today, even those who rent out mizigos [studio apartments] of Shs100,000 are starting to ask for it,” he says, “I think all landlords are taking advantage of the new law.” 

Tenants’ complaints 
Bless Tumwebaze is a young accountant that has had three bad experiences with the security month. He says tenants use all tricks possible to make sure the tenant does not get any amount refunded. 

“I lived in a house in Mpererwe, a Kampala suburb for a year. The landlord had made pay the security deposit before moving in, which I did. When I was leaving, I expected my money back because there was nothing broken, the walls were clean and without scratches because I lived alone and was barely ever home. He only gave me 10 percent of the amount, insisting that he had to repaint the house,” Tumwebaze says. 

He adds that the same thing happened in the house he rented next. 
“In the house I left recently, the landlady threw me out of the house because I refused to make the security deposit. I had seen the tenants fighting over the security month as they left. She never refunded anyone of them,” he says.

He believes that landlords find it so hard to refund this money because many of them are greedy. He adds that many people are devising ways to beat landlords at their own game by announcing they are leaving before paying the rent for the month that has just ended.

Recently, a Twitter user named Godfrey Kutesa tweeted thus:
“Landlords in Uganda have mastered the art of cheating tenants. On entry they tell you to pay three months’ advance and one month for “security”. You abide and pay. You stay in the house and maintain it. On exit, when the tenant demands for the “security” the landlords start playing hide and seek. 

80 percent of the tenants have never gotten a refund of their “security” deposit from their previous landlords even when the house has been left in good condition. They either get apologies or half of it. In Uganda everyone takes advantage of another.”

The tweet as expected drew a lot of comments many in agreement with his opinion and shared many tricks of beating the landlords at their own game. 

A one Amon Tusiimire Bibanja commented: “The best solution is for tenants to occupy one month extra to compensate that security month and also ensure exit of such premises at least two days to end completion of your month.”

But some were not in agreement with the notion that landlords are thieves. Clearly many believe that the security month is warranted. 

A one SNK disagreed by noting: “Never seen a tenant that leaves the house intact. I am not even worried about drilling walls and ruining the paint, tenants are very bad with kitchens and bathrooms. That security deposit just paints the house. It should be double by the way.”

Property managers speak
Lucy Kaitetsi Wamimbi, the head of residential agency at Knight Frank, a multinational property company, says other than in cases of reasonable wear and tear, which is inevitable, tenants who do not keep the property well should bear at least part of the cost of repair.

“If the roof leaks or after four years of renting the taps get loose or after three years the washing machine stops working, such costs should not be reasonably charged on the tenant. If you call me and tell me that your child just broke a windowpane while playing, that may not be included on the things you have to pay for. If you have drilled holes in the wall to hang your TV, pictures, CCTV, and so on, that usually is not included on things you must repair before leaving.

“But if I give you my furnished apartment for instance, and you are a smoker and you leave burn marks on the leather sofa that is not reasonable wear and tear. If all the glasses in the windows are broken, or you have drilled through tiles and broken them, or you have drilled though aluminium frames to pass cables, then I have to find new tiles to replace the broken ones, which is almost impossible. And in most cases I will not be just buying one to replace the broken one because some tiles maybe found on the market today, but will not be found in six months. Now I may need to retile the whole house because of the one tile. Usually, what we do, we tell the tenant to make the repairs and if they cannot, then they forfeit the security deposit,” she says.

Kaitetsi says the law is there to protect the tenant and notes that the best way to go about it is to make sure the tenancy agreement is very clear on what counts as damage. If the landlord tries to make up new types of damage, the tenant will be protected by the tenancy agreement. 

The landlord’s perspective
Cissy Namaganda is a professional property manager based in Kabalagala, a Kampala suburb who manages malls and residential homes under her portfolio. She says the reason many landlords started asking for a security deposit even before the law was passed is because tenants were taking advantage of landlords. 

“Tenants would run away from a house and leave huge utility bills unpaid and the landlord would have to first clear those before renting the property out to a new tenant.

The security deposit is an insurance cover just in case a tenant has not kept the house very well. For instance, you might find that the children have scratched the walls so much they need re-plastering and re-painting. You might find that the cabinets in the kitchen have been broken, the toilet and bathroom are in a sorry state (broken showers, taps, toilet seats, etc.), the floor tiles have been broken, lost keys, broken switches, broken windows, etc. It is that money that goes into solving such problems,” she says. 

She adds that in an instance where tenants escapes from the house without paying rent, the security deposit goes to catering for that as well.

Both the landlords and the tenants have strong feelings about the security month. While tenants believe they are being robbed, and are hell-bent on defying it, the landlords insist the properties usually need repairs after occupancy and the tenant must foot that bill. 

This is one of those times when neither can put themselves in the other’s shoes. And the law does not seem to be clear on what a tenant must do if the landlord withholds the security deposit without reason. 

Refund
Assuming the tenant is owed some or all of a security deposit, the landlord is responsible for returning the money after the lease terms are met. The agreement should stipulates how long a landlord has before returning a tenant security deposit.

If any deductions have been made from the deposit, the landlord must include an itemized list explaining the reason for each deduction and the amount.