Sectional title units tend to be favoured by buy to let investors, and it often happens that there is a high percentage of tenanted units in developments because of this, says Mandi Hanekom, operations manager for the sectional title finance company Propell.
It is important that the landlords in sectional title schemes know that they are responsible for the behaviour of their tenants. Serious problems can be created by tenants who behave in a way that is unacceptable to the other occupants and the trustees of the scheme are entitled to impose fines for misdemeanours, said Hanekom.
Fines charged can sometimes be R1 000 or more per offence, said Hanekom. The problem here is that it is the landlord who will be fined, and not the tenant. The landlord could try and get the money back from the tenant but chances are high that if the tenant is not co-operating, he won’t be likely to pay the fines.
Once fines are charged, the body corporate can then also add interest on the unpaid amounts, and the legal fees attached if an attorney is hired to deal with the matter.
“Serious problems creep in when the fines imposed are due to broken windows or doors and the landlord, while trying to sort his tenant issues out, will hold back on fixing the broken items. The trustees are likely to charge additional fines if the items the complaint relates to are not dealt with immediately,” she said. “The amount eventually owed to the body corporate can build up to a sum that will severely cripple the landlord financially.”
This sort of scenario shows how important it is to vet tenants properly when they apply to rent a unit. A full credit, employment record and reference check must be done before agreeing to let the tenant sign the lease.
It is advisable to employ a rental agent to manage the property, rather than doing it themselves. Rental agents have access to credit reference systems, and will have the time and know-how to interview the prospective tenant and check the validity of all the referees.
In many cases where there is a high percentage of tenants in a sectional title scheme, the general upkeep of units is sometimes lacking and, depending on the types of tenant, there is sometimes damage done. Owners of units tend to look after their own properties well in order to maintain and increase the value of their investment whereas this is not a priority for a tenant, said Hanekom.
It is up to landlords to manage their tenants according to the rules of their scheme and the Sectional Titles Act and make sure that they behave in the way that is acceptable to the other occupants, or the lease must be terminated.
According to the Rental Housing Act, owners of sectional title units must give a copy of the scheme’s conduct rules to their tenant, attached to his lease, and must ensure that the tenant is made aware of and understands them – as he will have to take responsibility if his tenant disregards the rules.