Advice and Opinion

Food for Thought for Landlords

Since the inception of the Consumer Protection Act, there has been much debate on whether provisions in the Act apply to residential leases – and because it does seem so, says Gail Cawood, general manager of letting at Knight Frank SA, it should be borne in mind that the initial vetting and checking processes before signing a lease should be stuck to so that the tenant is one who can be relied on to be a steady payer and who wants to live in the home for a long time.

Section 14 of the Act, which applies to fixed term leases, applies to juristic persons. Many landlords will know that tenants have the right to cancel their lease, giving 20 working days’ written notice, providing that all the rent due up to the date of the lease cancellation has been paid as well as a reasonable penalty, said Cawood.

But this section of the CPA also affects landlords who are struggling with non-paying tenants, in that in the case of a breach and the tenant is not paying his rent, that the landlord must give the tenant 20 working days to remedy the breach and can only cancel the lease on the failure to do so. The landlord can only then proceed with cancelling the lease and the necessary steps to have the tenant evicted.

With these conditions and the PIE Act in place, which makes evicting a tenant a very lengthy process (it could take up to three months), it is very important that the landlord tries to avoid getting himself into these situations, said Cawood.

The first thing often discussed is whether the landlord will manage his own property and this is often advised against, she said.

It is absolutely necessary to check references, the proof of income and to check the profile of the prospective tenant on TPN. Knight Frank SA’s letting division doesn’t only do one credit check, said Cawood, they will look the tenant’s payment profile up on Transunion, TPN and Experian, just to cross-check.

DIY landlords are not likely to have access to all this information and they very often go with a spoken reference or the word of the tenant, and this, unfortunately, can open him up to being taken advantage of and then later, not being able to get rid of the bad tenant for a few months.

As soon as a tenant shows signs of defaulting they should be sent the letter giving them 20 days to remedy the situation, said Cawood. The landlord should rather start the necessary processes as soon as there are signs of trouble.

Professional agents should always get the prospective tenant to complete an application form before signing a lease and should then proceed to check on:

· references from two previous landlords;

· proof of employment and how long he has been employed for; and

· his credit profile.

Keys should only ever be given to the tenant once the full deposit has cleared in the agency’s bank account and the first month’s rent has been paid, she said.

A rental agent will also manage the property and tenant for the full duration of the lease, checking every two or three months on the condition of the house and whether the tenant is looking after the property.

“Do not underestimate the work that goes into finding a tenant and managing the property as many things can go wrong during this time,” said Cawood. “We always advise against going it alone and prefer that the landlord leave the job to a professional agent.”

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