There is currently a very high demand for rental properties, particularly at the lower end of the residential property market, and frequently a prospective tenant will have credit checks done by the agent on completion of their application form and perhaps the necessary references done, but because of the particular circumstances of the tenant they are sometimes given occupation of the property prior to the deposit or first month’s rent being paid.
They could be waiting for a refund on their deposit from a previous rental or have had to pay over part of their deposit due to repairs becoming necessary to their previous leased property, but whatever the reason, this can often be the beginning of a disastrous relationship, says Lanice Steward, managing director of Knight Frank Residential SA.
“If the tenant has not paid the required sums and has possession of the property, there is frequently an ongoing battle to get the full deposit from the tenant or it can result in small instalments being paid over time.”
This is not advisable, as this is the landlord’s guarantee that, should the tenant cause damage to his property, the landlord has some financial recourse to put matters right. If he does not have this and the tenant has left, it will result in hugely expensive legal costs which at the end of the day cost more than the repairs, she said.
“The landlord eventually ends up writing the amount off and this could wipe out his profit for the year,” said Steward. “Another point to remember that once the tenant is behind in his payments, the chance of him completely catching up on the arrears is very slim.”
What often also happens is that a written lease agreement is not signed by both parties. While verbal leases are legal in South Africa when renting property, this is inadvisable as it is very difficult to prove what the conditions of the lease and agreements are between the two parties.
Another common mistake made is that on expiry of a lease, a new agreement is not entered into between the two parties. Although our law recognises that on expiration of a lease the parties continue on a month to month basis if there has been no formal arrangements made, it is advisable to enter into a new lease agreement and formalise the contract, said Steward. The onus is on the landlord or agent to contact the tenant before the lease expires to establish whether they will be renewing the lease.
This sort of scenario happens time and again and can lead to much animosity between the two parties, as did in a case (Marais N.O. and Others v Kondos) recently covered in a STBB newsletter. Although this was a commercial case, the same situations arise in residential cases too, said Steward.
In this case a lease was signed for six months, giving an option to renew for a further six months. After the initial six month period was up, the tenant did not renew but stayed on and continued paying the rental each month. He then put in an offer to purchase the property but could not get the bond approved. The tenant was instructed via attorney asking him to pay the full purchase price or vacate the property, giving him one month’s notice.
In the meantime, the landlord had found a tenant willing to take the property on a longer lease period and instructed the attorney to reject the month’s rental from the tenant, also rejecting a further offer to purchase and/or extend the lease.
This was taken to court and the trust argued that since a month to month lease had come into effect on the expiry of the first six-month term, this lease agreement was in place – which meant they were within their rights to give the tenant one month’s notice.
In this case, too, there was also no written correspondence to prove that there was a further lease of six months in place, and had there been it might have helped the tenant’s case, said Steward.
From the tenant’s point of view, it is equally important to look after their interests, she said.
Moving is costly and tenants might find themselves in a situation where one month’s notice is given and they have to hurriedly find another place to stay as well as find the extra money to move.
Tenants should also be aware that their deposit is meant to accrue interest for the time it is held by the landlord or the agent and they are within their rights to ask what interest rate they are getting or negotiate a better rate, said Steward.
Regardless of whether the landlord has kept up his end of the deal of fixing broken items in the house that he has said he will or not; the tenant must not be tempted to withhold rental payments as he could find himself blacklisted. From the landlord’s point of view, if the tenant has not paid his rent, he must too not be tempted to lock the tenant out or restrict his entrance to the building as he cannot take the law into his own hands.
“Landlords and tenants alike must remember there are processes in place for a reason: to protect both parties, and it is best to use them,” said Steward.
This information is published for general information purposes and is not intended to constitute legal advice. Specialist legal advice should always be sought in relation to any particular situation. Property Wheel will accept no responsibility for any actions taken or not taken on the basis of this publication.