How to negotiate your rental (and avoid eviction)

The year 2020 certainly showed us that life does not always go according to plan. Even more so within the rental market. The financial impact of the Covid-19 pandemic has many good-quality tenants finding themselves under unexpected financial pressure.

‘Affordability is vital when renegotiating’

The rental market has seen a high level of vacancies as the average South African deals with the economic impact of Covid-19.

TPN Rental Data for Q3 highlights the hardest-hit sectors with soaring vacancies are the properties at the low-end, rentals <R3,000 pm, with 17% of properties recorded as vacant; as well as the luxury property markets, as rentals >R25,000 pm contracted by fifty percent from 1.8% market share to 0.9% q-o-q spurred on by a 23% vacancy rate. However, no sector of the rental market has been left unscathed with double-digit vacancies across the board, according to TPN.  

With South Africa under Level 3 restrictions up until 15 January 2021, no evictions can be executed. However, eviction orders can be applied for and processed According to section 37, no person may be evicted for the duration of the alert level, unless under the appropriate court grants the necessary order. South African courts are in recess up until 7 January.

When problems paying rent do start surfacing, tenants need to communicate this to their landlord – the sooner, the better. Landlords are advised to consider the good-standing record of their tenants and be open to negotiation.

“Negotiated payment plans could become the bridge to finding a solution to the payment problem. If you become aware of a problem that will impact your income, or perhaps already know that there will be a delay, or even if your employment falls through – reach out proactively to your property manager or landlord to alert them,” advises online rental agent HouseMe. 

Negotiating with your landlord can solve your problem in the short-term via possible rental relief and in the long-term by restructuring your contract at a lower rent. The landlord can also agree to use your deposit to cover the shortfall. Landlords may even be willing to shorten your lease to help!

Do not wait until the deadline has already been missed to tell your landlord about it. If you know you are going to struggle with payment or delayed rental payment, you may struggle to negotiate in good faith with your landlord, and you might be evicted from your property.

If you do not want to end up being evicted because you waited too long, you can do the following: 

  • Agree with your landlord to pay later,
  • Use the deposit to cover the outstanding rent,
  • Negotiate the rental escalation percentage
  • Ask about sub-letting and get a housemate

“Always remember the sooner you contact your landlord about your problem, the more options or offers there are to solve the problem.”

What can you expect from your landlord?

The landlord may give you multiple choices as to how to resolve the situation, depending on your specific situation. The agreement reached will be subject to your lease agreement obligations. But given the global COVID-19 situation, many landlords are understanding and willing to assist with rental deferment deposit utilization and rental contract amendments, to really help you in a tough situation. This is why communicating is so important.

  1. Read through your lease to determine your obligations. Also, understand what a cancellation penalty might apply if you stop paying altogether.
  2. Email your landlord explaining your current situation and proposed solutions/ request to amend the lease terms.
  3. Make sure that you can show the calculated difference between what you propose and what the contract would have earned the landlord. This will help explain his loss and/or recovery of loss that you’re proposed.
  4. Keep your pledges, promises, and commitments in writing. Ask for their confirmation of a new solution in writing as well. Landlords negotiating partial payment arrangements with their tenants will undoubtedly request that you sign an amendment outlining the arrangement.
  5. Keep committed to doing what you can, where you can. Although the market is tough for consumers everywhere, the landlord wants to keep you as a tenant – and ideally, you want to stay! So listen and really try to meet the landlord halfway with what she/he asks for. 

Renewing your rental lease agreement

With many residential property leases coming up for renewals, PG van der Linde, rentals manager for Seeff Pretoria East, highlights the need to negotiate previously stipulated escalation percentages in renewed lease agreement. It goes without saying that no renewal or escalation percentage negotiation will be viable if a tenant is not paying their rent and failed to communicate properly with the landlord.

Tenants who acted with integrity are likely to find landlords willing to renew their lease and possibly even on better terms.

Many tenants may find that the landlord will look to conduct renewal credit checks to confirm the tenant’s affordability and do a renewal inspection and tenants should be prepared for this. Keep in mind the timeframe for renewal, usually stipulated in your lease agreement. Tenants are advised to initiate this conversation, especially if they have not heard from their landlord. 

Rental lease contract renewal is not automatic 

Craig Watchurst, a rental agent with Seeff City Bowl says, “If no renewal option or agreement is reached, the lease will simply terminate, and the tenant will need to vacate by 12pm.” 

Van der Linde said it is important that there is a written agreement which can either be by way of an addendum to the original lease or a new lease agreement.

If there is a stipulated escalation percentage, it is still possible to negotiate the rental amount. “If the landlord is not amenable, the tenant would need to decide whether to accept the new rental or move to avoid added financial stress. Ensure the agreement reflects everything that was agreed with the landlord.” “If there is no provision made for the period for which the lease must be renewed, then the landlord and tenant need to agree. If the period proposed is not suitable to the tenant, once again it may then be in the tenant’s best interest to give notice to not renew his/her lease agreement period and vacate when the term reaches its end,” advises Van der Linde

Article courtesy of Lexis Digest & Property24