Category

Rent

Jan 25
0

How to evict non-paying tenants

By | Evictions, Rent, Tenants

Evicting a non-paying tenant is a legal matter that should be handled to avoid incurring losses. This is how an eviction can be done.

Reprinted from citizen.co.za, by Kayla Ferguson – 2024-01-23

While it can be a lengthy process to evict tenants who fail to pay their rent, there are procedures in place to make sure that both the tenants’ and the landlords’ rights are protected. Following the necessary steps is key to a hassle-free eviction process.

Legal provisions

Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa explains that both the tenant and the landlord must play fair with respect to their rental agreement.

“It is crucial to abide by the contractual agreements and, if not, to then proceed with the required legal procedures stipulated in this regard. It is only when people deviate from this that issues start to occur,” he notes.

Tenants are protected by two pieces of legislation, namely: the Prevention of Illegal Eviction from Unlawful Occupation of Land Act, No. 19 of 1998 (PIE Act), and the Rental Housing Act of 1999 (RHAct) as amended. The first sets out the process for evicting tenants, and the second makes it a criminal offence for a landlord to simply cut the supply of electricity or water, change the locks, confiscate tenants’ belongings, or stop a tenant from having access to the property.

“It is vital to always play by the rules. While you might think you can get a non-paying tenant out quicker if you change the locks or defer to other intimidation tactics, the truth is that this will most likely only provide the tenant with ammunition to use against you in the court proceedings. This will only drag things out further and cause more unnecessary complications and delays,” says Goslett.

Although it might be forgivable for the odd late payment if it’s a bank or financial system-related problem, a landlord cannot be so lenient if their tenant gets into the habit of paying their rent late.

How to go about the eviction

“Because the monthly payment date forms part of the rental agreement – which must also comply with the Consumer Protection Act – when a tenant doesn’t pay on time, they are technically in breach of contract. Legally, this means that a landlord should send the tenant a formal letter explaining that they have 20 business days to make the payment, and if they don’t pay their rent in that time, their lease will be cancelled,” Goslett explains.

If the tenant fails to pay what is due within the stipulated timeframe, the landlord can legally terminate the lease and ask them to leave. If the tenant refuses, the landlord can then take out a court order to evict the tenant for breach of contract.

“This process can take up to six months, during which your tenant can stay in your property and will probably still not pay rent. Once the eviction is granted, the tenant is usually given at least another 14 days to find new accommodation before the eviction order is executed,” says Goslett.

Because the eviction process can be so lengthy, Goslett suggests taking steps as soon as possible to prevent too great a loss of income. “The longer you take to act on a late or missed payment, the longer it will be before you can legally evict a tenant who continues to miss payments.”

To guard against this, landlords are encouraged to work with a professional RE/MAX rental agent who can thoroughly screen potential tenants and minimise the risk of late or missed payments.

“It can be tempting to go it alone in the mistaken belief that handling the property rental yourself will save you money. Also, when we’ve found the perfect tenant, it’s impossible to think that something might go wrong – until it does. It is better to get expert help from the very beginning than to try and navigate these challenges on your own,” Goslett concludes.

For more information on evicting a non-paying tenant

Simon Dippenaar & Associates, Inc. is a law firm of specialist eviction lawyers in Cape Town, Johannesburg and Durban. We help landlords and tenants maintain healthy working relationships. Contact one of our eviction attorneys on 086 099 5146 or simon@sdlaw.co.za if you need help evicting a non-paying tenant.

Further reading:

Jun 20
1
Rent control

The history of rent control

By | Lease Agreement, PIE, Rent, Rental Housing Act

Rent control no longer exists, but tenants are still protected  

If you are a tenant, you know that South Africa’s rental housing market is in crisis. Anyone who has tried to find a property to rent in Cape Town recently will tell you they’ve been one of a dozen prospective tenants to view a property in one afternoon, often trailing around multiple properties with the same group of contenders. When they finally find a place they like, they are one of three or four candidates (or more!) to submit an application to rent. Landlords have their pick of tenants, and tenants often wind up bidding for a property – offering more than the advertised rental – just to secure a desirable property. Those with limited budgets struggle to find suitable accommodation, or wind up moving far from friends and family to secure affordable lodgings. It’s not easy for landlords either. Despite the competition for tenancies in Cape Town, in other parts of South Africa it can take months to find tenants. 

The economy is in crisis, and rental arrears are common. Landlord–tenant disputes often wind up in the eviction courts. Rental housing legislation and the Consumer Protection Act give tenants indisputable rights, but rental housing is still a minefield. Landlords also have rights, along with responsibilities. Do they have the right to put up rents, and to what extent? What does the law say about rent control? We look at the rules and regulations governing rent and rent increases in South African law.

What is rent control?

Rent control is a law placing a maximum price, or a “rent ceiling,” on what landlords can charge tenants. Rent controls may sound desirable, from a tenant’s perspective at least, because the ceiling is usually set below market level. But economists agree (a rare occurrence!) that rent controls are destructive. They generally reduce the amount of housing available, even in uncontrolled zones. There is rarely enough supply of rent-controlled properties to meet demand, and excess demand must then be met by noncontrolled properties. This demand pushes rents up in noncontrolled areas, and the average price of rental housing winds up being higher than it would be with no rent controls. The other effect of rent controls is to reduce supply, because landlords unaffected by controls fear the controls might eventually reach them, and don’t put their properties on the rental market. New investment into rental housing is often diverted to other ventures, leading to a deterioration in housing stock. Therefore, while rent control might sound like a good strategy for tenants, it does not result in a healthy rental housing market.

Rent control in South Africa

The place most famous for rent control is New York City. But South Africa also had rent controls in the past. When and why was rent control implemented – and abolished? 

Historically, South Africa passed rent control legislation to protect tenants from exorbitant rent increases and evictions which were a result of the acute housing shortage that existed around the time of the Second World War. Initially, the aim was to provide some security of tenure for existing tenants, along with a limited number of grounds for eviction. Property owners did not appreciate these restrictions and viewed the legislation as an infringement of their common law rights. For example, common law allowed landowners to terminate a month-to-month lease by giving one month’s notice. However, the courts declared that the one-month notice period was to be interpreted as “not later than the first day of the month to be effective for that month”, which meant the actual notice period could be longer than 30 days. Another example was the restriction placed on landowners by the Rent Control Act 80 of 1976 regarding notice to vacate, i.e.:

  • Three months’ notice if the dwelling was required for personal occupation
  • Six months’ notice if required for renovation, giving the tenant the first right to re-occupy the dwelling
  • 12 months’ notice if the landowner  intended to demolish the dwelling

Landowners also had to satisfy the High Court that the demolition or reconstruction was in the public interest and the Minister of Housing had granted permission. 

As a result, landlords campaigned to overturn rent control and these restrictions. Their efforts were broadly successful and rent controls were subsequently limited to dwellings built and first occupied on or before October 20, 1949. Any tenant, regardless of income, who occupied this category of dwelling was “protected” by the provisions of the Rent Control Act. Tenants whose dwelling did not fall into this category, but who were occupants at the time the dwelling was de-controlled, still enjoyed the “protection” of the rent control legislation if their income was within a specific income band.

Eventually, rent control ceased to apply to any dwelling built after 1978-1980 and all dwellings in “white” residential areas were eventually phased out of rent control by the early 1990s.

How is rent governed now? 

Residential leaseholders are no longer “protected” under Rent Control legislation. The Rental Housing Act of 1999 provided a “cooling off” period of three years for tenants who were living in rent-controlled dwellings. On July 31 2003, rent control ceased to exist, enabling landlords to increase rentals without restriction and removing the requirement to apply to a statutory body (the now-defunct Rent Boards) for an increase. 

Self-governing market

The Rental Housing Act does not dictate the rate by which a landlord may increase the rent each year. However, the amount of increase and the frequency with which the increase can occur should be clearly set out in the lease agreement. It is usually one year, and corresponds to the date of lease renewal. The landlord may not attempt to increase the rent during the lease period unless the lease contains a clause permitting it. Furthermore, the landlord may not increase the rent excessively, i.e., above market rates (the rate one can expect to pay for a similar property in the same area). The market has been left to govern itself.

Rents are generally increased by 8-10% per annum. Rental income is not pure profit for a landlord. Property owners bear the operating costs of municipal rates, insurance, maintenance and repairs, and interest rate movements if the property is mortgaged. In the current inflationary environment, landlords have to ensure their annual recalculation maintains their rental at a viable level, while also remaining cognisant of the cost pressures their tenants are facing.  

A balancing act

The abolishment of rent control was welcomed by landlords, but removed an element of financial protection from low-income, previously disadvantaged tenants. The Constitution ensures a right of access to adequate housing and a right to occupy land with legally secure tenure. However, the lack of legislative restrictions on property rents means that some tenants struggle to find suitable affordable rental housing options. As a result, they have been forced to occupy properties that are outside their budget, thus increasing the likelihood of defaulting on their rental payments and, by extension, increasing the chance of eviction. Where there is limited supply of housing stock and excess demand, as in Cape Town, the market tends to push prices up. Most experts agree that rent control is not the solution. But the current housing crisis in South Africa demonstrates there is a severe need for more affordable housing to be available. 

Meanwhile, if you need help

At SD Law, we are a law firm of specialist eviction lawyers in Cape Town, Johannesburg and Durban. We can’t change legislation or influence market forces, but we can help both landlords and tenants with rental housing matters, including reaching mutually acceptable agreements regarding rent and other conditions of occupancy. If you need assistance with a dispute or want advice on any aspect of rental housing or landlord–tenant relations, contact one of our eviction attorneys on 086 099 5146 or simon@sdlaw.co.za.  

Further reading:

Feb 22
0
The Right Letter of Demand

Letter of demand

By | Lease Agreement, PIE, Rent, Rental Housing Act, Tenants

How to ensure the correct documentation with defaulting tenants

What happens if tenants stop paying rent? How can a property owner legally demand payment? What does rental housing legislation require? The answers depend on the nature of the lease and the nature of the tenants.

Consumer Protection Act

The Consumer Protection Act 68 of 2008 (CPA) governs fixed-term agreements between persons. A lease agreement falls into this category. A landlord must give the tenant 20 business days’ notice to rectify any breaches with the lease agreement (e.g., late rental). If the tenant pays the amount owed within this time frame, the matter is resolved. If not, the landlord is entitled to terminate the lease agreement and seek new tenants – hopefully ones who will always pay their rent on time.

Rental housing is governed by more than one piece of legislation. The Rental Housing Act 50 of 1999, Rental Housing Amendment Act 35 of 2014, and Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 (PIE) apply, along with the CPA. In determining the application of the CPA, there are two key factors to consider.

  1. Is the lease agreement for a fixed period? 

This is fairly standard with lease agreements. The most common period is one year, but two years and six months are also found. If the lease is not a fixed-term agreement, it is known as a month-to-month lease agreement. The CPA does not apply to month-to-month leases and the landlord can give the defaulting tenants a seven-day letter of demand for the money.

However, this is not the same as eviction. The Rental Housing Act 1999 requires the landlord to give the tenants one calendar month’s notice to vacate the premises.

If the lease is for a fixed period, the CPA applies and the tenants must be allowed 20 business days to rectify the breach. Only if the breach is not rectified can the eviction process begin.

If the lease was for a fixed period but has since expired, and the tenants have remained in the property by mutual consent, this is considered a month-to-month lease agreement operating on the same terms as the original lease agreement. These terms will continue to apply to the month-to-month lease. CPA will not apply and the seven-day letter of demand can be used. When it comes to giving notice to leave the property, the notice period stated in the original lease applies. If no notice period is specified in the lease, a minimum of one calendar month’s notice is required.

  1. Are the tenants a natural person or a juristic person?

If they are a natural person the CPA applies and 20 business days’ notice is required.

If they are a juristic person then the process to follow depends on their size and value. If the annual turnover or asset value does not exceed R2 million the CPA applies, along with 20 business days’ notice. If turnover or value exceeds R2 million, CPA does not apply and a seven-day letter of demand can be issued.

The following infographic shows the process to follow:

Source: TPN Credit Bureau

For further information

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 eviction attorneys on 086 099 5146 or simon@sdlaw.co.za if you need advice on letters of demand or the eviction process.

Further reading: