Tenants don't want the deposit, and removing it changes nothing they do

Two objections usually greet the deposit alternative. First, that tenants won't really choose it. Second, that removing the deposit wrecks their behaviour: they'll trash the unit or skip the last month. The data answers both, and neither holds.

Tenants are already choosing it

Offered a real choice at signing between a cash deposit and a small monthly waiver, most tenants don't pick the deposit. At properties where deposit-free residential leasing is on the table, up to 7 in 10 new tenants take the waiver, and around two in three do so consistently. That demand shows up on the book. Leases insured have grown from R20m to nearly R35m in under ten months, and the growth is still accelerating.

The behaviour worry doesn't survive the data

The second objection is the serious one. If the deposit is a discipline device, removing it should make tenants worse. We tested that on a rent-normalised comparison of waiver and deposit cohorts. It made no difference.

Monthly churn is flat at 3.4% versus 3.3%. Move-out balances relative to rent are identical at 123% in both cohorts. Damages at vacate are 22% lower for waiver tenants. Whatever the deposit was doing, disciplining behaviour wasn't it.

The deposit wasn't holding anyone accountable. It was holding their cash.

Why that makes sense

A single-month deposit rarely covered a real vacate balance, so its deterrent value was mostly theoretical. Replace it with a rewards layer that pays out on a clean exit and the incentive shapes conduct better than a lump sum held hostage. Affordability changes at move-in. Intent at move-out doesn't. Demand is real, and the downside landlords fear doesn't appear in the numbers. We set out the portfolio case in why South African institutional landlords are dropping cash deposits.