Outlaw abuse of tenants’ security deposits

There is every incentive in the world for landlords to push deposits up. FILE PHOTO | NMG
There is every incentive in the world for landlords to push deposits up. FILE PHOTO | NMG 

If a citizen stole Sh120,000, or Sh450,000, from another, one has to hope the criminal justice system would kick in, and the thief would end up behind bars.

But in Kenya, we suffer a systemic theft that has never been criminalised, or even disincentivised, of tenants’ security deposits, by landlords.

It is a single gap where millions of Kenyans lose money that is theirs. Yet the problem begins from the very start, with layer-on-layer legislative neglect that leaves almost every tenant in the country victim to misappropriation.

The starting point is the scale of the deposit itself. There is no law capping what landlords can demand as an initial deposit. Many opt to take a month’s extra rent, on top of the monthly prepaid rent, and a large majority also take additional utility deposits.

Since any unpaid utility bills can be deducted from the security deposit itself, the taking of additional, dedicated utility deposits is already superfluous.

But in many cases, landlords now also push up the security deposit itself beyond a month’s rent, to even two months or three months’ rent. There is no justification for the extra, but nothing, either, to stop landlords demanding a higher amount.

Moreover, as the law is currently structured, there is every incentive in the world for landlords to push deposits up.

Because, beyond the unusual gap in setting no caps on the security deposit itself, the Kenyan law is even more ‘absent-without-leave’ in placing no requirements whatsoever on what landlords can do with that deposit money once collected.

They can take a holiday at the coast, buy themselves an extra sofa set, or do anything they like with it – and not a law broken anywhere with it all entirely ‘spent’ - which doesn’t bode well for the tenant’s chances of recouping it on departure. It doesn’t exist any more.

And getting back money the landlord doesn’t have is a tilted see-saw - down and going to stay down, on any and every possible pretext the landlord can find. Because they don’t have the money to refund.

Thus, that gap, right from there, changes the whole deposits game. For, if landlords in Kenya, as elsewhere in the world, were required to place the deposit in an escrow account, with a lawyer, or in a deposit protection scheme, landlords’ incentives to get ever larger deposits would disappear.

Why get three times as much to sit with a lawyer untouched? Then, come the departure date, the huge pressure to find a reason not to refund is also gone.

Because the money is there, ready to cover any costs on departure, and of way less benefit to the landlord - being only the difference between one replaced toilet seat and no replaced toilet seat. Versus being a ‘for anything’ spending pot (that’s actually already spent).

In the UK, which has an obligatory deposit protection scheme, the landlord, indeed, has no rights to any of the deposit without proof of an unpaid utility bill or unrepaired damage to the premises over and above fair wear and tear.

Moreover, the scheme, which automatically adjudicates on any deductions, no more favours the landlord than the tenant. The only amounts sent to the landlord must be proven claims.

And, thus, millions of citizens in rented accommodation can hand over rental security deposits that are actually purely security deposits.

Of course, running a deposit guarantee scheme costs money and staffing, so it’s easier and cheaper to let Kenyans be universally robbed every day.

But even a clause that required landlords not to spend the money, but to place it in a visible escrow account, would help – and how much does a line of legislation cost, if it mitigates, and removes the pressure, on millions of illegitimate thefts?

So, really, don’t tell us to go to the rent tribunal, which will cost more than the lost deposit itself. Build law that solves 7/8ths of the problem by stopping the money being spent elsewhere in the first place.