This year, beleaguered South Africans have been forced to tighten their belts yet another notch or two as the impact of Covid-19 continues to bite deeper into our flailing economy and it’s becoming increasingly important for consumers to learn where and how they can save money.
“This is especially true in the rental arena where a little knowledge can go a long way,” says Lorraine-Marie Dellbridge, Rentals Manager for Lew Geffen Sotheby’s International Realty in Cape Town’s Southern Suburbs.
“Being familiar with the rental regulations, especially regarding moving in and out inspections and deposits can save you from having to fork out for additional expenses, as well as from unnecessary stress and delays.”
Property inspections
Thorough inspections when you move in and out are crucial. The fact of the matter is that landlords and tenants often disagree on who is liable for repairs or damages to a rental property and the best way to resolve conflict and avoid the possibility of a costly legal battle is by having a thorough inspection report.
The lease agreement should, of course, make it very clear who is responsible for what, but common sense should also prevail on both sides, according to the Chas Everitt International property group.
“Landlords need to remember this and accept the fact that there are times they will have to pay someone to repair a fault or replace something broken. And that is much easier if they allow for it when calculating the expected net returns from their buy-to-let investments.”
“A comprehensive report should include photographic evidence of any defects, as well as the general state of the entire property, and it should be done before the new tenant moves in with both the tenant and landlord or managing agent present and signed by both parties,” says Dellbridge.
“Most leases make allowances for tenants to add to the list of defects within seven days of moving in, so if tenants spot anything that was missed at the ingoing-inspection they should immediately notify the agent/landlord in writing and ask for it to be attached to the inspection report.
“Don’t ignore it – and make sure your email is acknowledged. The same applies to issues that arise during tenancy. Never ignore or make light of a problem because the chances are it will come back to bite you later – and by then it may cost a lot more to repair.”
Deposits
“Legislation dictates that tenants are entitled to earn interest on their deposits in line with savings accounts with our local banks,” says Dellbridge.
However, this is often not the case, especially with private landlords who are often unaware of this obligation and the lost interest can amount to a considerable sum, especially if a tenant stays in the property for a number of years.
“Remember the law is the law and in terms of the Rental Housing Act, the law states a tenants deposit is to be placed in an interest-bearing account and such interest is for the benefit of the tenant,” she says.
“It’s also important to note in South Africa, we may not contract Out of Law and, as such, if your lease states anything different in terms of the handling of the deposit, then that lease is not lawful.”
The rental deposit is normally paid by the tenant to secure a property, once the lease has been signed. Section 5 of the Rental Housing Act of 1999 provides for this. In South Africa, the deposit is usually equivalent to one month’s deposit, but it may be different, depending on the risk appetite and affordability of the contracting parties. The deposit is an amount negotiated and agreed between the landlord and the tenant, and there is no legislation that governs what that amount should be.
Of course, the higher the deposit, the better it is for the landlord in terms of the amount he or she will have at their disposal to repair any damages or defray outstanding utility costs at the termination of the lease.
Moving out
According to Dellbridge, this is the stage at which tenants often incur the most loss, especially if they are relying on the return of their deposits for their new accommodation.
“If the ingoing inspection was done properly and all issues acknowledged and signed off by both parties, a tenant will be fully aware of the condition of the property when they moved in, so if they hand it back in the same condition at the end of their tenancy, there should be no problems.
“Also bear in mind that once that outgoing inspection has taken place, you’ve lost your right and opportunity to fix anything so it’s vitally important that you attend the final inspection and use the opportunity to raise any issues or resolve potential grey areas.”
Michael Bauer, Managing Director at SAProperties.com says as per the Rental Housing act 50 of 1999 that governs the relationship between landlord and tenant, tenant and a landlord must joint entry and exit inspection. Failure by the landlord to inspect the dwelling in the presence of the tenant, is deemed to be an acknowledgement by the landlord that dwelling is in a good and proper state of repair and the landlord must refund the tenants deposit with interest.
Should the tenant fail to make themselves available for the inspection on the landlord’s request, the landlord must inspect the property within 7 days after the expiration of the lease, inform the tenant of damages found if any, that will be deducted from the deposit, and present receipt of such damages on request to the tenant, he says.
However, it’s a different story if there are damages to the property that require repairs.
“This is where vacating tenants often come unstuck because the landlord now legally has 14 days to refund – but they assume it to mean that the deposit must be refunded within 14 days of having vacated the premises whereas the landlord actually has 14 days from restoration of the property,” says Dellbridge.
“In other words, only once the damage has been repaired, does the two-week countdown begin. It does not mean that the landlord has 14 days in which to repair and refund.”
She adds that delays in deposit refunds are often due to small oversights such as outstanding municipal accounts or fact that departing tenant has omitted to supply their banking details for the refund.
Breaking a lease
Although this has sadly been unavoidable for many people this year, unless the saving between the existing and new rent is considerable, it can end up being a very costly and stressful exercise and should not be undertaken lightly.
According to Dellbridge, the repercussions of breaking a lease depend largely on the lease agreement.
“Most agencies have pretty standard leases that address the current laws pertaining to the premature ending of a lease agreement, most often addressing the financial penalties in terms of breaking a contract under the Consumer Protection Act should a new tenant not be sourced in time.
“However, in my experience, private leases go one way or the other; some are so strict that there is no wiggle room at all for tenants and then others are so lacking that the landlord is left with no option but to watch a tenant leave with no recourse of or penalty.”
Article courtesy of Lexis Digest and property24