THE Rent Assessment Board is seeking legislation to restrain landlords from demanding any more than a month’s rent in security deposits from potential tenants, an official has confirmed.

The widespread practice of landlords insisting that their tenants hand over deposits ranging from one to three months’ rent has been the subject of much debate. Potential tenants often do not protest, for fear of not getting the property in a competitive housing climate, but others have wondered about the legality of the action.

The Rent Restriction Act is silent on the issue of the legality of accepting security deposits for rented property. But according to director of the Rent Assessment Board Cecile Croll, new legislation could be enacted soon to once and for all clarify the burning issue.

Croll told the Observer that a committee charged to make recommendations on amending the Rent Restrictions Act had completed its work and now awaits legislative changes that will formalise the process.

“A Bill has been drafted by the Rent Board and the Policy Unit of the Ministry of Water and Housing and has been submitted to Parliament for approval,” Croll said in an interview. “We finished the review last December and I am hopeful that things can go smoothly.

“The committee making the recommendation has suggested that the security deposit should be worth no more than the equivalent of a month’s rent. Failure to comply with this legislation, once it becomes law, could result in punishment for offenders.”

Attorney-at-law Delano Franklyn from the law firm Wilson Franklyn Barnes, said that the practice was not against the law.

“Some landlords ask for up to three months’ security deposit. That, according to the Act, is not illegal, but many tenants are prepared to go along with it, because of the difficulty in finding housing accommodation at a cost that he or she is able to pay,” Franklyn told the Observer.

“The potential tenant, if he feels that he is being overcharged by the landlord, can report the matter to the Rent Assessment Board, which could give guidance on the matter, but is not in a position to force the landlord to change his request,” he said.

As far as the practice of charging rent in United States currency is concerned, Franklyn agreed with Croll that it was impossible for anything to be done about it, as the relevant section of the Rent Act was also silent on the issue of the currency which a tenant is required to pay a landlord.

“The fact that the Act is silent on it means that a tenant can have an arrangement with the landlord and the landlord can have an arrangement with the tenant to pay in whatever agreed currency, which includes US dollars,” Franklyn said.

“Because it is a matter between the tenant and the landlord, the tenant would know very well that if his rent is pegged to the US dollar, then any devaluation or revaluation will have an impact on the amount to be paid, and while generally speaking one can say that it is probably unfair, the fact that both of them agreed for it to be paid in US dollars is something that you cannot ignore,” he added.

“You may ask the question, what if the landlord is demanding that the payment be in US dollars, if the tenant would have any recourse. The fact that the Act does not speak to the currency would mean that the recourse that that tenant would have is to try and find somewhere else, or he can make a report about the matter to the Rent Assessment Board, whose direction is primarily not founded in law and therefore can only be regarded as guidance,” Franklyn said.

He argued that the Rent Restriction Act was no longer relevant in the current economic climate. The Act came in vogue in 1955 and has been amended over the years, most significantly during the 1970s when it was deemed that many landowners were taking advantage of tenants.

“Children were being restricted from certain properties, many landlords would implement draconian measures when rent was not paid on time, like nailing up doors, go to the house at irregular hours to interface with the tenant,” he said.

“The Act was amended to reflect the conditions that faced tenants. Now we are living in a different situation. We are living in a time when it is market forces that determine economic relations between tenant and landlord,” Franklyn said.