Pay your rental deposit with bitcoin
Forest Views claims it is first development to accept crypto22nd Aug 2021
In May this year we explored whether banks would accept bitcoin as deposits when people applied for home loans. Sadly, banks are nowhere near accepting cryptocurrency.
However, one property development company has dipped its toe in the cryptocurrency waters and is now accepting them as rental deposits.
A new way of doing business
This week affordable residential and student housing specialist Quorum Holdings has claimed it is the first to allow tenants to pay deposits with cryptocurrency savings.
Saul Mayers, group legal of Quorum Holdings, says that this innovative option is a new way of doing business and could be adopted elsewhere.
He explained: ‘We are excited to be trialling rental deposits in crypto for our latest development in Johannesburg, Forest Views. Depending on how it works, we will expand to other properties in both Joburg and Cape Town.
‘Our typical tenants are young professionals, who are familiar with crypto and may want to use theirs as a deposit instead of the standard deposit practice,’ he says.
Where will the money be held?
The rental deposit will be held by cryptocurrency exchange Luno. Only two cryptocurrencies are currently approved under this new initiative, and they include bitcoin and Ethereum.
‘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.
Marius Reitz, general manager of Luno for Africa added: ‘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.’
What happens if the crypto appreciates or decreases?
The amount of crypto which is provided as the rental deposit is the amount of crypto which will be available at the end of the lease. Should the crypto depreciate, the tenant will still get the same amount of crypto back regardless of the depreciated market price.
Mayers added: ‘Rental deposits are either returned to tenants if the property and account is in good standing, or used to offset any repairs, damages or outstanding amounts. If the deposit is needed to offset costs, Quorum will shoulder the loss. For instance, if the tenant’s deposit is worth R10,000 at the time it is provided, but the tenant absconds and the rental deposit is worth R5,000 at that time, Quorum will shoulder the loss.’
Gains are also enjoyed by the tenant. Mayers explains: ‘Using the previous example, if the crypto deposit is worth R15,000 at the end of the lease, we will refund the original crypto deposit – the gain will not be kept by Quorum Holdings. In other words, the tenant will either enjoy the highs or ride the lows.’
To date, no deposits have been paid with crypto, but Mayers points out that the offering has only just been launched. He added: ‘However, we believe that our tenants will see this as a beneficial way to use their cryptocurrency.’