QUORUM Holdings, a company that builds affordable residential and student housing, is the first in South Africa to accept rental deposits in cryptocurrency, and to allow tenants potentially to benefit from an increase in value, Quorum legal director Saul Mayers said this week.
Rental deposits are standard practice in South Africa, but tenants do not usually benefit from the money held by their landlords. And deposits can be held for several years, depending on the lease.
Quorum’s portfolio of properties were expected to reach about 3 000 residential units in Joburg over the medium term and another 5 000 beds in student accommodation through a subsidiary Urban Circle.
Mayers said this option for rental deposits represented a good use for cryptocurrencies and a new way of doing business. Rental deposits in cryptocurrency would be trialled at their latest development in Joburg, Forest Views, he said.
“Depending on how it works, we will expand to other properties in both Joburg and Cape Town,” he said.
Typically, tenants in the company’s properties were young professionals who were familiar with crypto and may want to use theirs as a deposit instead of the standard deposit practice, he said.
The crypto rental deposit – equal to one month’s rent –would be held on South Africa’s largest cryptocurrency exchange, Luno. Tenants would transfer the agreed deposit to Quorum Holdings’ Luno business account.
“Tenants may use Bitcoin or Ethereum to secure their leases, knowing that their crypto will also be held on a safe, trusted platform. The risks associated with the price volatility of crypto are still there, but all gains are for the tenant when they leave the development, with the landlord being prepared to shoulder any possible losses,” says Mayers.
Luno Africa general manager Marius Reitz said in a statement: “Bitcoin was developed as a medium of exchange. As cryptocurrencies become more mainstream, we expect to see increased adoption. Quorum Holdings’ offering tenants the option to pay their rental deposits in crypto will benefit the tenant.”
Quorum’s financial director, Brad Bentz said: “Not only does this allow us to improve existing assets, but also to develop high-yielding assets in niche market areas.”
Quorum’s latest residential building, Forest Views, in Bramley, offers new rental apartments that have one or two bedrooms, a bathroom and lounge. The first two months are rent-free and the complex had uncapped wi-fi, an outdoor gym, a children’s play area, laundromat, prepaid electricity and security.