Category

COVID 19

Jan 12
0

Landlords likely to have stricter credit and rental checks after Covid-19 financial impact

By | COVID 19, Lease Agreement, Rental deposit
Rental market likely to see stricter credit checks

Landlords are advised to use their judgement and approach each situation on a case-by-case basis. (iStock)

Reprinted from Fin24, by Carin Smith – 2021-01-11

  • Most South Africans rent the property where they stay
  • Many are now also without jobs or have experienced a drastic reduction in income due to the pandemic
  • Landlords are likely to apply increasingly strict credit and rental record checks

South Africa’s rental market is likely to show only very minimal growth – if any – due to the current combination of high vacancy rates and economic pressures on tenants, according to Gerhard Kotzé, managing director of the RealNet estate agency group.

In his view, most landlords and rental agents are likely to apply increasingly strict credit and rental record checks. Deposit requirements are also likely to rise.

“A very large number of quality tenants have become home buyers in 2020 due to the lower interest rates, and on top of that landlords have had to contend with extensive non-payment issues due to the economic effects of Covid-19 pandemic and lockdown, so they are already very cautious when it come to new tenants,” says Kotzé.

“And unfortunately, a large number of those who are likely to be looking for rental properties now are people who already have some financial problems. So, there will be a need to be even more careful.”

Alternatively, says Kotzé, many rental property owners will probably just decide to sell off their portfolios now, so astute investors who have the means to buy quickly should look out for the “bargain” flats and townhouses that will come on to their local markets as a result.

Grant Smee of Only Realty says even in the best circumstances, securing reliable tenants is tricky, but the pandemic has added an extra layer of complexity into the mix.

He says data shows most South Africans rent rather than own the property where they stay. Many are now without jobs or have experienced a drastic reduction in income, leaving them suddenly unable to afford rent.

“This shift gives rise to a situation in which tenants hold more power than before and has led to an increase in short-term rental agreements being signed. In addition, tenants are calling the shots in terms of deposit amounts and various other conditions which leave landlords feeling vulnerable,” says Smee.

Recent statistics from the Tenant Profile Network (TPN) indicate that 60.74% of tenants paid their rent on time during the last quarter of 2020, while 9% of all tenants are not paying rent at all. “Long-term rentals provide financial security for landlords, and in the past agreements were generally set up to protect the interests of both parties equally.

However, today, tenants may have more say in compromises when it comes to issues such as deposit payments too.

“In a market with excess rental stock, landlords may be more amenable to reduced deposits and short-term rentals in order to stand out from the crowd,” says Smee.

“Landlords looking to take advantage of the demand for the short-term letting market, need to ensure their property provides excellent value and a unique offering. Here factors such as location, price, quality and overall experience can ensure that they stand out from other competing units.”

Challenges for Landlords

Smee says landlords were largely unprepared for tenants being unable to pay during lockdown, leaving many of them without access to an open line of credit. Very few landlords have rent default insurance and payment holidays are now up.

“While tenants are certainly more able to demand compromise, and landlords are beholden to new pressures such as short-term rental agreements, it’s unlikely that tenants will be able to ‘strongarm’ landlords into drastically one-sided agreements,” says Smee.

Landlords are still considered to hold most of the negotiating power and retain the ability to write terms and conditions into leases which are favourable to them. On the other hand, landlords feeling the pressure to retain good tenants or adjust to the difficult current market may see fit to compromise and offer lower deposits and short-term rental agreements to remain competitive.”

Smee suggests that the current situation in the rental market requires agreeing on a middle ground, where both parties consider the other’s circumstances. This could include tenants paying an available rent, and landlords being more flexible by offering short-term rentals, deposit utilisation or rental deferment.  Landlords are advised to use their judgement and approach each situation on a case-by-case basis.

Links added by SD Law

Do you have questions about your lease agreement or rental deposit?

Whether you are tenant or landlord, if you have questions or concerns about your existing lease agreement or security deposit, contact Cape Town law firm SD Law for a confidential discussion. We will explain your rights and responsibilities to ensure a worry-free tenancy. Contact Simon now on 086 099 5146 or email him on info@sdlaw.co.za.

Further reading:

Dec 05
0

Cape backyarders still without basic decent services, says anti-eviction campaigner

By | COVID 19, Evictions

Backyard dwellers have been left in the dark about whether the City will be rolling out decent services by Christmas. Picture: Phando Jikelo/African News Agency(ANA)

Backyard dwellers have been left in the dark about whether the City will be rolling out decent services by Christmas. Picture: Phando Jikelo/African News Agency(ANA)

Reprinted from the Cape Argus, by Marvin Charles – 2020-12-01

At the beginning of the year the City said it had allocated R2.1 billion for formal housing and R4bn for informal settlements and backyard dwellers, but according to a number of communities not a cent was used.

Twalo said the poorest residents who stayed in backyards were most at risk of Covid-19 because they had no proper water or amenities.

“They have not prioritised backyarders, this government, and next year for local government elections they will make more empty promises.”

The City said that it had allocated about R2.1bn over the medium term for formal housing opportunities on suitable, well-located land, close to public transport, jobs, government services and public amenities, and more than R4bn has been allocated for formalising informal accommodation, such as informal settlements and backyard dwellings. At the time it was gearing up to implement its housing strategy, which at present is going through public participation.

According to a report by the City, rapid urbanisation is making it difficult to provide services to backyard dwellers. It also said it was unable to deliver services to some areas effectively as they were too densely populated.

Gatvol Capetonians’ Fadiel Adams said: “We reject the City’s provision for services because that makes backyarders’ living arrangements permanent. The City should rather use that money to provide land to the people.”

“They (the City) don’t feel accountable. People are being evicted and the lockdown and Covid, for them, has become a blessing,” said Adams.

Mayco member for human settlements Malusi Booi said: “The City was the first city in South Africa to introduce basic services provision to backyarders. The backyarder programme entails the provision of water, sanitation, refuse and electricity services to backyarders residing on council-owned property, such as rental units, where it is possible to do so.

“At times the services are rejected by the residents or community leadership; space is also a challenge to install services, as the backyard dwellings are generally densely populated. Over the medium-term more than R4bn has been allocated to the upgrading of informal settlements which includes basic service provision to backyarders.”

However, Booi did not say how much of the budget announced at the beginning of the year has been spent.

Links added by SD Law

Simon Dippenaar & Associates, Inc. is a Cape Town law firm of specialist eviction lawyers,  now operating in Johannesburg and Durban, helping both landlords and tenants with the eviction process. Contact one of our attorneys on 0860995146 or sdippenaar@sdlaw.co.za if you need advice on the eviction process or if you are facing unlawful eviction.

Further reading:

 

Nov 18
1

Alert Level 1 evictions granted as long as they are just and equitable

By | COVID 19, Eviction law case summaries, Eviction news, Lease Agreement

A recent case from the Swartland shows fair consideration for all parties in an eviction

In the early stages of the National State of Disaster brought on by COVID-19, evictions were not allowed. It would have been politically contentious and downright unfair for people to be evicted from their homes just when we were all required to stay at home. As hard lockdown gave way to gradually lessening restrictions, the status of eviction orders also changed. For a while eviction orders could be granted but not executed, unless a tenant posed a danger to the landlord or the property. Now, as we near the ninth month of the State of Disaster, there is light at the end of the tunnel for property owners. Alert Level 1 evictions are being granted. In this article we look at the factors that constitute a reasonable eviction case. 

Case by case

We have reviewed recent cases that have resulted in successful Alert Level 1 evictions, and have gained an understanding as to what the courts consider to be fair (or ‘just and equitable’ in law). Furthermore, there are time parameters that must be met before the court will order the Sheriff to physically evict the tenant. 

Philander v Makiet 

While PIE and other rental housing legislation protects tenants against impetuous and unfair treatment by landlords, owners also have the right to the use and enjoyment of their property. As such, they must be allowed to evict a tenant who is illegally occupying premises. In an effort to ensure both parties’ rights are respected, confusion has arisen as to what the courts will allow. Several cases have been heard that have helped the courts to define just and equitable eviction proceedings during this unprecedented time. 

The case of Philander v Makiet was a significant watershed, decided by three judges in the Western Cape High Court. Although they arrived at the same conclusion, two of the judges expressed quite different reasons for their opinions. The judgment clearly explains the factors they considered in granting the Alert Level 1 eviction order, and what conditions must be present generally in the current environment. 

In determining justness and equality, the court stressed that all relevant circumstances should be considered. What exactly are those circumstances? The judgment states: “Among those circumstances the availability of alternative land and the rights and needs of people falling into specific vulnerable groups are singled out for consideration.” In this case the tenant was a 19-year-old male with no dependants, whose grandparents and sister lived not far away.

The time frame also matters 

The availability of alternative accommodation is a key consideration. The time frame given for the tenant to vacate the premises is also important. And it must be reasonable not only for the tenant but also for the property owner: “…what date would be just and equitable upon which the eviction order should take effect. Once again, the date that it determines must be one that is just and equitable to all parties.”

In Philander v Makiet, the tenant was originally given notice to vacate the property, fully within the terms of PIE and the Consumer Protection Act, more than 18 months previously. There was ample time to find suitable alternative accommodation. As there was no cooperation on the part of the tenant, and considering a wide array of circumstances, the court awarded eviction from the premises, to be vacated by 31 October. This was more than a month from the date of the eviction order.  

Secure a successful eviction

This case demonstrates that the courts will grant an eviction order under Alert Level 1, allowing tenants a reasonable time frame to find alternative accommodation and vacate the property. If you are a landlord seeking eviction, you must make sure you can prove that your eviction is just and equitable. The illegal occupancy of the premises is not the only factor the court will look at. A judge will want to be satisfied that the tenant has access to alternative accommodation. Courts need to know that tenants will not be left destitute and without shelter. 

You can facilitate this process by requiring your tenant to provide an address for potential alternative accommodation in the lease agreement. This will ensure they have a viable option, should you need to terminate the lease, and the court will be assured of the tenant’s security if you have to apply for an eviction order under Alert Level 1. 

For further information

SD Law is a Cape Town law firm, with offices in Johannesburg, with specialist eviction lawyers. If you are seeking an eviction, we can advise you on how to construct your case to meet the court’s requirements, as evidenced by recent case decisions. Contact Simon Dippenaar at Cape Town Eviction Attorneys on 086 099 5146 or email sdippenaar@sdlaw.co.za.

Further reading: