On the expiry of the lease – a case for adding a little time into the equation

 

In our communication with landlords we try to stress the importance of sending us their new tenant documentation early in the month to avoid unnecessary stress and possible disappointment. While month-end stress is part of the job for us, we thought we would break down the registration and vetting process to show landlords how they can ensure a smooth tenant turn-around process.

At around three months before your tenants current lease agreement is up for renewal you will need to make two important decisions:

Decision #1:

Do you want to keep your current tenant or would you like them to move out? Your current lease agreement should give you the option to terminate if you are not happy with the tenant. It is wise to bear in mind factors such as current economic conditions – a tenant in the hand who is a 99% good tenant may be worth much more than the possibility of having no tenant at all. For the purposes of this article, let’s assume that either landlord or tenant decide to terminate. By law a landlord needs to notify the tenant 40 – 80 business days before the expiration of the lease agreement whether or not they plan to renew or terminate the lease.

Decision #2:

Are you prepared to forgo one month’s rent and invest some money in order to get your place ship-shape for your next tenant? You could potentially procure a better tenant at a higher rental. Remember, even if there are no damages, your rental property investment is subject to wear and tear and all homes need some love and attention from time to time.

Consider scenario A:
Think-Ahead Thelma decides to give her current tenant notice and sign up with RentMaster

Investing the time and money in giving her unit a “face-lift down time” will reduce the stress levels of all parties concerned:

  • The exiting tenant will be able to move out on the last day of the month (their legal right) without the landlord breathing down their neck
  • Landlord and tenant can perform the exit inspection with a clear view of the property and all damages. (By law the joint exit inspection must be conducted no more than three days prior to the tenant vacating, although we suggest you do this inspection after the tenant has moved their belongings to best be able to determine any damage)
  • The landlord gets a quotation to repair any damages which is deducted from the security deposit. Remember in terms of the Rental Housing Act the landlord has 14 days to affect the repairs and refund the tenant the remaining deposit. If the tenant failed to attend the outgoing inspection the landlord must perform the outgoing inspection on their own within 7 days from the date that the tenant vacated. In such a case the deposit only has to be refunded within 21 days from date of the expiration of the lease. Releasing the deposit is the most common source of anxiety for the tenant, who invariably relies on the deposit to secure a new place
  • The landlord has time to fix the place up properly and focus on finding a good tenant
  • The new tenant can view the newly spruced-up property without tripping over the clutter and drama of the vacating tenant
  • When calculating the new rental, the landlord has factored in half a month’s vacancy per year (assuming a lease agreement period is two years, the legal limit)
  • The landlord has more than enough time to sign up to RentMaster’s rental collection service:
    • The landlord fills in the Mandate and supporting documentation
    • The tenant fills in the Rental Application plus supporting documentation
    • The landlord pays R105 for the credit check
    • When all the above is complete and up-to-date, RentMaster vets and approves the tenant. (Bear in mind:
      • If the tenant is declined, the landlord will have to find a new tenant and submit new forms and documentation
      • It might take us a little while to get through to the correct person at the tenant’s employer – one of our check-points)
    • The landlord and tenant do the entrance inspection, which is included in the lease agreement supplied by RentMaster
    • The landlord and tenant sign the lease agreement and send it to RentMaster
    • The tenant signs a debit order authority
    • The tenant pays RentMaster the deposit
    • Once the preceding three steps are completed, RentMaster adds the tenant to the debit order run
    • The tenant can move in.

Now imagine scenario B:
Last-Minute Lucy gives her current tenant notice and mandates RentMaster to collect the rent from her next tenant:

All of the above but squashed in at the end of the month, remembering that after the 20th of the month we cannot guarantee that we will have the vetting completed by month end.

So, ask yourself: do you really want to add so much stress to your life?