Keep your rental income flowing freely
Have you recently become a landlord? Or maybe you’ve had problems with tenants in the past and want a bit of guidance to avoid trouble in the future? We’ve laid out the key things you need to know when embarking on a rental agreement with a new tenant.
Is a formal lease necessary?
A written lease is not essential for your agreement to be binding, but it can save a lot of hassle later on and prevent disputes over ‘who said what?’ Putting everything in writing will clarify the terms and conditions of the rental agreement and ensure you have captured all the minutiae that can lead to conflict if not addressed at the outset. Are pets allowed? Can your tenant let the spare room for cash? What date in the month should the rent be paid? A written lease spells everything out so there is no doubt on either side. And if your tenant requests a written lease, you must comply.
We can draw up a lease for you or you can download a standard lease agreement here.
What information should be included on a written lease?
- Your name and your tenant’s name
- Your postal address
- Your tenant’s postal address
- The address of the property being leased
- The agreed rent, the amount of increase and when it may increase (e.g. by 10% at annual renewal) and the frequency of payment (monthly, quarterly, etc.)
- The amount of any deposit
- What each party is responsible for, e.g. utilities, maintenance, etc. (usually, tenants pays for charges related to things they use, such as water and electricity, and landlords pays for charges related to the property, such as rates)
- The notice period for quitting the property (applicable to both parties) and the conditions under which you can end the agreement early (for example, if specific maintenance is not done, or if the tenant is in arrears with the rent)
- If there are ‘house rules’, such as no loud parties, they should be signed by both parties and attached to the lease
- A list of defects drawn up during a joint inspection when the tenant moves in. This should be signed by both parties and attached to the lease
How does a background check work?
You should always ask prospective tenants for references. While it is normal to obtain a reference from the current tenant, it can also be helpful to speak to previous landlords, in case the current landlord gives a good reference simply to get rid of an undesirable tenant. You should also request a letter from the tenant’s employer to verify his employment status and income. You can also do an ITC credit check (call TransUnion ITC on 0861 482 482 or visit www.transunionitc.co.za) or we can carry that out for you.
What about a deposit?
A deposit is your insurance against your tenant defaulting on the rent or damaging your property beyond normal wear and tear. A deposit must be put in an interest-bearing account for the duration of the tenancy and given back to your tenant, plus the interest it has earned, when the tenant moves out. But the deposit can legally be retained and used to pay for repairs or to cover the money owed to you in the event of non-payment of rent.
What if the tenant is behind with the rent?
Technically, your tenant is in breach of contract. Your lease should have a breach clause in it; this is the time to enforce it. If you don’t have a cancellation agreement or breach clause in the lease, or if you want to give your tenant a reasonable chance to put things right, it is good practice to write a letter giving your tenant seven days to pay, failing which you will cancel the lease. We can draft the letter and send it on your behalf. Many tenants will take a ‘lawyer’s letter’ more seriously than one from the landlord alone!
What is the eviction process?
A landlord may not evict a tenant. You may seek a court order to evict a tenant if your tenant is in breach of contract, for example if the rent has not been paid. However, we would urge you to encourage the tenant to rectify the breach. In fact the Consumer Protection Act allows for this. Legal action is the last resort and, however justified, is never pleasant, especially where someone’s home is involved, so it is always advisable to give the tenant the opportunity to put things right.
What if there is damage to the property?
There will always be normal wear and tear. More serious damage can be repaired out of the deposit, if you asked for one. These steps will ensure a fair process for both parties:
- When your tenant moves in, inspect the property together and list, in writing, any existing defects – you should both sign this and attach it to the lease agreement
- When your tenant moves out, inspect the property again together, preferably just before moving day. Compare the two lists
- Either of you can do the repairs. If you decide to do them yourself, keep all receipts for repairs paid for out of the deposit. Your tenant is entitled to see them
- If the repairs cost less than the deposit plus the interest earned, you must repay the balance to your tenant
Who can help?
The Rental Housing Tribunal can advise you of your rights and responsibilities as a landlord and can help in the event of a dispute with a tenant.
Or contact us. At Simon Dippenaar & Associates we are specialists in property law. We act for both landlords and tenants and therefore know the challenges faced by both parties; and we have an intimate knowledge of the legislation from both sides.
Call us now on 087 550 2740 or email firstname.lastname@example.org if you need help drawing up a lease or handling a difficult situation with an existing tenant.