Hidden costs of renting a home in South Africa

Renting a home in South Africa involves more than just the monthly rent—many tenants are unaware of the additional costs that can quickly add up. From application fees to inspection costs, understanding these hidden expenses is crucial for budget-conscious renters. Below, we break down the most common fees associated with renting a home in South Africa, helping you plan your budget more effectively.

Application fees: What you need to know

When applying to rent a property, tenants are often required to pay a non-refundable application fee, which averages around R250. This fee covers the costs of processing your application, including a credit check. It's important to note that you won’t get this fee back, even if you don't end up signing the lease. However, you are entitled to request a copy of your credit report, which can provide valuable insights if your application is unsuccessful due to affordability or poor credit history.

Lease agreement costs and legal fees

Another expense to consider is the initial lease fee, which covers the costs of creating and executing your new lease agreement. This fee typically averages R1,000 but can vary significantly depending on the area, with some high-demand locations charging up to R2,000. This fee is non-refundable and is used to cover administrative expenses and legal documentation.

Find out more about lease agreements

Inspection fees: Incoming and outgoing explained

Joint incoming and outgoing inspections are legally required under both the Rental Housing Act and the Property Practitioners Act. An incoming inspection fee, usually around R500, is charged for the detailed inspection of the rental property before you move in. This inspection documents the property's condition to ensure any existing damages are noted, providing a basis for comparison at the end of the lease. The outgoing inspection, also costing approximately R500, is conducted when you vacate the property. This inspection is crucial for getting your security deposit back, as it determines whether there is any damage beyond normal wear and tear.

Remember that mandatory disclosure forms are a requirement and that you will need to have it in place to protect yourself and the landlord you are renting from.

To find out more about mandatory disclosure forms for renters read our guide.

Monthly administration fees: Are they legal?

A common fee that tenants encounter is the monthly administration fee, which averages around R100 per month. This fee covers the costs associated with managing the rental, such as monthly invoicing, arrears chasing, and maintenance call-outs. Some tenants mistakenly believe these fees are illegal, but they are permissible as long as they are outlined in the lease agreement. As more rental agents seek to recover the time spent on these tasks, these fees are becoming increasingly common.

Understanding interest on arrears

If you miss a rent payment, landlords and rental agents are legally allowed to charge interest on the overdue amount. The interest rate can be specified in your rental agreement, provided it is reasonable and compliant with applicable laws. In South Africa, the common practice is to charge 24% per annum (2% per month). However, if an interest rate was not specified but interest is payable on late payments, the maximum rate provided for under the Prescribed Rate of Interest Act (currently 11.25% per annum) may apply. If no provision for interest exists, landlords cannot charge it on late payments.

Be proactive: Ask about extra fees

The Consumer Protection Act mandates that all fees and charges must be disclosed to a tenant before entering into a lease agreement. However, rental applicants should also be proactive in asking their rental agent about any additional fees they might incur. These fees can vary widely depending on the property and the area, so understanding them upfront can help you avoid unpleasant surprises.

Need more information on the costs landlords often forget? Read our guide for landlords