Advice and Opinion

Rental management policies – what estate home owners should know

Property Finance Generic

If you are buying a property in an estate or a cluster home complex, you should ensure that the homeowners’ association (HOA) has a formal policy covering the letting of homes in the development as well as the obligations of those owners who decide to become landlords.

“This is necessary to protect property values in such developments”, says Gerhard Kotzé, MD of the RealNet estate agency group. “Most tenants will be happy to comply with HOA rules and live in harmony with their neighbours,” he explains, “but there are always those that persistently break the rules – and count on it being difficult for the HOA to get their absentee landlords to take any action against them, as long as they keep paying the rent.”

In addition, he says, non-resident owners have historically been less interested in the overall condition of the development, and less willing to invest any money in home maintenance and repairs. “And if a lot of the homes are rented, this can quickly lead to the estate or complex as a whole looking neglected – and to home values being undermined as it becomes difficult to attract prospective buyers.”

Kotzé says that a formal rental policy, written into the HOA rules, is the best and fairest way to prevent such a situation from developing, and that the items written into such a policy should include:

  • A requirement that owners who rent out their properties include the HOA rules (including the rental policy) in their lease agreements;
  • A provision that any violation of the HOA rules will automatically constitute a breach of the lease agreement; and
  • A provision that the owner of the rented property will in such a case be required to take corrective action, including eviction of the tenant if appropriate.

The HOAs of developments in coastal towns or other resort areas may also want to set a minimum rental period to discourage short-term or “holiday” letting that would almost certainly disturb long-term residents, he says.

“In addition, the HOA should for security reasons insist that landlords supply it with the names of their tenants as well as their contact details and vehicle information, and with copies of their lease agreements including the HOA rules.”

Such a policy, Kotzé says, will go a long way towards preventing disputes that have to be taken to the new Ombud for Community Housing Schemes to resolve.

“Meanwhile for their own protection, home owners who plan to let their properties should also work with a reputable rental management agency that will check the creditworthiness and rental history of any prospective tenant before handing over the keys.”