How long does it take to assess prospective tenant?

Unsurprisingly, the answer to this question is: it depends.

If a landlord has provided us with the tenant’s complete and up-to-date information and we are able to contact all their references, we are usually able to conclude the profiling and vetting within 24 hours or less. Delays are most often caused by incomplete or outdated information supplied by the tenant or the landlord. Another hurdle that can add time to the vetting process is non-co-operation of the tenant’s employer. We are often unable to reach the relevant HR authority to verify employment and salary, or if we are able to contact them, they are reluctant to disclose any details due to privacy concerns.

So, if you are in a hurry to place a tenant, the good news is that there’s a lot you can do to expedite the process:

  • Check that you have supplied all the information required:
    • Certified copy of the tenant’s ID
    • Tenant’s last 3 months’ bank statements
    • Tenant’s last 3 month’s pay slips
    • Rental application form, completed and signed by the tenant.
  • Ask your tenant to inform her employer’s HR department that they will be receiving a call from RentMaster and that she gives them permission to answer any questions. If she can supply you with a contact name and number, even better.
  • Remember to send the application to applications@rentmaster.co.za to ensure prompt processing.

I already have a tenant. Can I still use your services?

RM-Q&AThis is a question we are often asked and, as is often the case, there is a short answer and a much longer one that contains a lot of “ifs”.

In short, of course we can help you…

if we have had a look at and are happy with your current lease agreement or the tenant agrees to sign a RentMaster lease agreement;

if we have drawn a credit report for the current tenant (to which she must agree) and we are satisfied that she can afford the rental amount. (We will not need a credit report if you have been maintaining your tenant’s payment history on the Tenant Profile Network (TPN) database);

if the tenant signs a debit order authority.

Since the tenant has already occupied the property and probably there is an existing agreement in place, she is under no obligation to agree to these requests so the ball is really in your court as a landlord.

Another question we often get: Where have you been all my life?!

Prescreen your tenants and save time and money

When we screen a potential tenant, our first step is to draw a TPN report to assess the tenant’s historic payment profile.

TPN is a registered credit bureau, a company that provides consumer credit information on individuals which helps you to assess a tenant’s credit worthiness.

If you’re in a hurry to place a tenant – and want to save yourself a bit of money in the process – you can prescreen your prospective tenant by drawing this report yourself.

To do this, you need get the tenant to sign the Rental Application Form, which gives you the tenant’s written permission to call up the report. Registering with TPN is a simple procedure and once you have entered the tenant’s details, you will receive a report which will offer you a lot of detail including a Credex score of between A and F. A is an excellent credit profile and F is poor. If the applicant gets a C or better, you can submit their details to RentMaster for further assessment. Anything below C will probably not get approved.

(To find out more about the basket of assessments we do at RentMaster to asses the suitability of the applicant, read this article.)

Rental guarantee vs deposit guarantee

We are often asked how RentMaster’s rental guarantee differs from a deposit guarantee, and by implication, which one is better.
deposit-guaranteeA deposit guarantee is an insurance product that makes it possible for tenants – who actually cannot afford the deposit – to take occupancy, typically at an extra 10% of the rental amount. From the landlord’s perspective, it covers damages to the property and legal expenses associated with evicting a non-paying tenant, usually capped.

A product that benefits both landlord and tenant – what’s not to love?

At RentMaster we believe the deposit is an important incentive for a tenant to look after the property. Ask yourself: who will look after your property better: a tenant who had to find the money to pay a deposit and is relying on getting her full deposit back or a tenant who knows that the insurance will pay for damages?

We are passionate about cultivating best practice from all stakeholders in the property rental market. We actively mitigate risk, manage monthly payment administration and invest time and effort into encouraging good tenant and landlord behaviour.

What’s more, when tenants pay their rent promptly and develop good financial habits, they improve their credit rating which will eventually enable them to become property owners and even landlords of the future.

A deposit guarantee may well enable a cash-strapped applicant to qualify as a tenant, but it is not necessarily of long-term benefit to the tenant. If a tenant is planning on staying in a property for a year or more, she is probably much better off getting a bank loan to pay the deposit. By paying 10% extra for a deposit guarantee product, she will have paid off the deposit in ten months. From the 11th month on, the 10% premium is only of potential benefit to the landlord, and when she moves out of the property, she doesn’t get a cent towards her next deposit.

Deposit guarantee vs rental guarantee in a nutshell

Deposit guarantee vs rental guarantee in a nutshell

Let’s talk admin

Whether you’re signing up for a deposit guarantee or RentMaster’s rental guarantee, you’re going to have to do some initial admin to get your tenant approved. But with RentMaster ALL the admin is upfront. You never have to claim because we pay your rent on the first working day of the month, no matter what. And making sure the tenant pays is our problem, not yours. With a deposit guarantee, you have all the admin associated with collecting the rent and the claims admin every time something goes wrong.

But, you may ask yourself, why are rental guarantee products so popular with agents and property managers? There are a couple of reasons. Firstly, it increases the number of potential tenants: even if an applicant can’t afford the deposit but passes the credit check, she still qualifies. Also, a deposit guarantee is an easy add-on product for agents to sell: the landlord typically pays the agent one-month’s rent as a placement fee and the tenant covers the deposit guarantee. Remember, the agent gets his placement commission – irrespective of the tenant’s future payment performance.

While the deposit guarantee insurance may help place a tenant in residential areas where there is little demand and compensate landlords for some damages after the fact, it offers no administrative support or pro-active management of non- or late-paying tenants. RentMaster’s active management will prevent the problem in the first place, saving you time and the frustration of claiming after the fact.

In short: we’re hands on and right beside you every step of the way.

The “PIE Act”: It’s all about following the procedures

landlords&Lawstamp

No property owner ever wants to evict a tenant, but if ever you find yourself in this situation, it would be wise to acquaint yourself with the The Prevention of Illegal Eviction and Unlawful Occupation of Land Act of 1998 (“PIE Act”). We asked Sonja Wijnja, RentMaster’s legal officer to break it down for us.

“Whereas the Rental Housing Act (RHA) deals with the duties and rights of both landlord and tenant, the PIE is more focused on preventing the unlawful eviction of tenants and spelling out the legal procedures that landlords should follow to remove unlawful occupant. As such, it is a much more challenging read than the RHA, and is fraught with procedural complexities.”

According to Sonja the two most important things you need to know about the PIE Act are:

  1. You cannot evict a tenant unless the tenant is he is an unlawful occupier. This is usually because the lease has been cancelled.
  2. You may not forcefully put tenants out of your property – whether by changing the locks, chasing them away or moving other people into the property. A tenant may only be evicted if a Judge has had oversight and ordered an eviction.

In Sonja’s opinion the biggest mistake landlords make is to assume that they can take the law into their own hands if the tenant did not pay. “If you remove the door; move other people into the property or forcefully evict the tenant yourself without any court action, you will not have a leg to stand on in court.”

If, for example, a tenant has not paid the rent, he must be informed in writing and must be given fair notice to remedy the matter. It is only after the tenant has failed to perform in spite of having been given fair opportunity to redress the situation that he is deemed an illegal occupant. (See our Nuts & Bolts  article on this topic.)

The landlord may now appeal to the court to evict the tenant, but the magistrate might still not rule in the landlord’s favour.  She will take factors such as whether the tenant is unemployed, a single mother, elderly or infirm or other mitigating circumstances into consideration before making a decision. She might, for example, rule that the tenant be given more time to find alternative accommodation in terms of the Act’s provision that a tenant is offered a “just and equitable time to find alternative accommodation”.

“Alternatively, you can appoint RentMaster to administer your rental collection – we collect the rent so well that we last needed to evict a tenant in 2015.”

A landlord’s view of the Consumer Protection Act (CPA)

We spoke to Sonja Wijnja, RentMaster’s legal adviser, to give us some insight into the CPA and how it affects landlords.

sw_fin

The CPA regulates the marketing and provision of goods and services to consumers and protects them against unfair practices previously used by some service providers. In the context of property rental, a tenant is the consumer and a landlord is the service provider.
“It is especially with regard to the lease agreement that many landlords are misinformed and are often in breach of the CPA. One misconception that landlords often have is that they think that as long as they have their requirements stipulated in a lease agreement that has been signed by both parties, it will stand up in court. However, if the requirements are contradictory to the terms of the CPA, it won’t. The Act always trumps anything stipulated in the lease agreement.”
“For example, a landlord may include an early cancellation clause that states that if the tenant cancels early, she has to pay for the entire outstanding period. This is sharp contradiction with the provisions of the CPA, which entitles a consumer to cancel with 20 days’ notice.” (More information regarding early lease termination here)
CPA_Sonja tips

The Rental Housing Act & your rights as property owner​

The most important laws governing the relationship between landlords and tenants are:

  • The Rental Housing Act (RHA)
  • The Prevention of Illegal Eviction and Unlawful Occupation of Land Act (PIE) and
  • The Consumer Protection Act (CPA)

These three laws attempt to balance the often-conflicting interests of the property owner and the tenant and establish a legal framework for the resolution of disputes that arise during the tenant’s occupation of a property.

In this article we will focus on the RHA and how it affects you as a property owner. Please note that this information is not intended to be legal advice and you should at all times consult a qualified attorney to properly discover your rights and recourse.

Currently the RHA of 1999 is still in play although the 2014 amendments have been accepted and are awaiting promulgation by the president.

What will change?

Going forward, landlords will be obliged to reduce agreements to writing, which in the past was only necessary if the tenant requested it. Even though the 2014 amendments are not yet in force, we strongly encourage landlords to have a written and signed lease agreement that also includes all subsequent agreements. In our experience written agreements are always better than verbal ones, especially if it needs to be tested in court. Verbal agreements are open to interpretation and when disputed by the other party, the court may be required to hear oral evidence. This can lead to unnecessary delays as well as escalating legal fees. (For more information about how to draw up a good lease agreement, read our  Nuts & Bolts article on this topic.)

Chapter 3 of the RHA is the pertinent section and outlines the duties and rights of the owner and  tenant. It is worth reading these pages as this is the area where most disputes arise. In summary:

The owner:

  1. May not discriminate against applying tenants on the basis of amongst others (but not limited to) race, gender, disability, religion, age, disability, language, birth, gender;
  2. Must respect the tenant’s privacy and make proper arrangements should access to the premises be required;
  3. May terminate the lease due to material breaches of the agreement as long as this does not constitute an unfair practice (here we look to the CPA for procedural guidance and if the tenant is deemed an “unlawful occupier”, PIE action may be instituted.);
  4. Must receive the property back in the same condition at the termination of the lease, save for fair wear and tear, and recover costs associated with repairs to damage caused by the tenant (as recorded in the entry and exit inspections) from the security deposit held for this purpose.
  5. Perform structural maintenance on the property when notified of such damage by the tenant (again there are some grey areas here, specifically if the structural maintenance required resulted from damage caused by the tenant or as a result of the tenant’s failure to perform fair maintenance).

The tenant:

  1. Must make prompt and regular payment of the rent as agreed in the lease, and is entitled to receive written receipts for all payments made;
  2. May not unreasonably deny the owner his right to access the property if proper notice has been given;
  3. Adhere to the House Rules (if applicable) as attached to the lease agreement;
  4. Perform fair maintenance of the property and garden, typically explicitly specified in the agreement.

Disputes most often arise in the following broad areas:

  1. The tenant does not pay the rent in full or on time;
  2. The tenant does not adhere to house rules or specific requirements recorded in the lease agreement;
  3. The tenant does not perform regular maintenance/repairs and upkeep to the property;
  4. The owner does not perform structural repairs when requested by the tenant;
  5. The owner makes deductions from the security deposit at the end of the lease that are contested by the tenant.

While each of these actions is a direct contravention the Rental Housing Act, the CPA and PIE also come into play in terms of the procedures followed by the parties in their attempts to rectify the issue.

For more information about how RentMaster can help you manage your rental property, call us on 0861 250 250 or email us on info@rentmaster.co.za

 

What are your rights when your tenant terminates her lease agreement early?


This is one of the questions we are often asked at RentMaster. Many landlords are under the impression that if they have a signed lease agreement, their tenant can’t terminate early.

This is not the case: the Consumer Protection Act (CPA), which was promulgated to protect consumers from being exploited by suppliers, also applies to lease agreements and gives tenants the right to terminate before the end of the lease period. As a landlord, you are deemed a supplier and your tenant a consumer. It is important to note that the CPA will always trump whatever is recorded in terms of early cancellation in your lease agreement.

Torn-lease-agreementThe tenant’s rights

The tenant can terminate the lease agreement at any time and is obliged to give the landlord 20 working days’ notice. This means that she may inform the landlord on the 20th of January of her intention to move out on the 20th of February. She may not be penalised unfairly for early termination.

What about the landlord’s rights?

The landlord has the right to recover fair damages that are a direct result of the early termination. For example, many landlords contract a rental agency to find them a suitable tenant at an average cost of one month’s rent. They then pass this placement fee on to the tenant. What is more, a landlord must actually have incurred the costs before he can claim them as damages. If you claim loss of rental income as a result of vacancy you must be able to prove that the property was vacant and that you tried to fill it.

If the tenant feels that she has been unduly penalised, she can refer the matter to the rental tribunal, where the matter may take a long time to be resolved and the outcome may not be in the landlord’s favour.

Our advice to landlords whose tenant has terminated the lease agreement early:

  • Be fair
  • Don’t be greedy
  • Communicate clearly
  • Move on: recover any direct damages from the tenant but also spend your energy on finding a new tenant.

 

My tenant hasn’t paid his rent – now what?

The constitution guarantees every person living in South Africa the right to a roof over their head – even if they have not paid the rent. In other words, you cannot evict someone for failing to pay the rent. You can, however, cancel the lease agreement if the tenant is in breach, eg. by not paying the rent on time.*

If you are renting out your property, you have an 85 percent chance of having a tenant who pays his rent on time… and a 15 percent chance of a tenant who either pays late… or not at all. Do you know what to do if your tenant doesn’t pay his rent?

The slippery slope

At RentMaster we are often contacted by property owners who have tried to self-manage the rental of their property and have run into problems with a tenant falling further and further behind with their rent. In most instances landlords tell us that the nightmare situation “crept up” on them and by the time they realised they had a problem, it was a serious problem.

Let’s take a typical example:

Anne’s story

Anne finds a tenant, Joe, to rent her apartment. She draws up a lease agreement that she and Joe sign.

Joe moves in on 1 January and pays his rent of R5000 on time for the first three months.

On the first of April, Joe phones Anne and tells her that his salary will be paid a week late as his company is experiencing cash-flow problems and he will only be able to pay her on the 8th.

This sounds reasonable and Anne agrees to this arrangement.

On the 8th Joe pays only R2500. Anne only realises this on the 10th and phones Joe on the 11th. Joe does not answer his phone and Anne leaves a message. Joe does not return her call.

She goes to the apartment on the 15th and finds Joe at home. He tells her that he’s been sick and he’s really sorry about the inconvenience. He promises to pay the rest of the outstanding rent by the 20th.

Anne is relieved because she does not enjoy confrontations but she depends on the rental income to make ends meet. The 20th comes and goes. On the 25th, Anne finds that Joe has only paid R1250.

By the beginning of June, Joe is two months behind on his rent and is avoiding any contact. Anne contacts RentMaster. It takes another two months to evict Joe because the correct notifications need to be sent in order to be able to properly cancel the lease agreement.

Let’s retell Anne’s story with a happier ending

Our story starts the same way, with Joe moving in, paying on time for the first three months and only paying half the rent on the 8th of April.

Instead of phoning, Anne gives Joe a letter in his hand. The letter contains the following important information:

  • Joe is in breach of the lease agreement because he has not paid all his rent
  • He has 7 days to rectify the matter by paying the rent in full (she spells this out)
  • If he does not pay within 7 days, the agreement will be cancelled in 20 working days from the date of the notice, as prescribed by Consumer Protection Legislation, and he will then have to vacate the premises.

Anne has brought a friend with her to witness the fact that she has given Joe the letter. If Joe refuses to sign, her friend can testify that he did indeed receive it. (She could also have sent the letter by registered mail, in which case she needs to retain the receipt and track the letter to the point when it was delivered to Joe’s post office.)

Now Joe knows that she means business and that if he does not pay in full, he could be evicted as early as mid May. In all probability Joe will ensure that paying his rent in full and on time is his first priority and never give Anne reason to worry again.

If, however, he continues with his current payment trend, Anne has already taken the first step in the legal process of eviction.

By giving Joe this letter instead of phoning, the communication is clear and unambiguous. Telephonic and face-to-face conversations are open to interpretation and people usually remember what they want to.

Of course, if you would prefer not to be hassled with the technical, legal and often combative field of tenant relations, you can simply appoint RentMaster to do it for you. For 4.56% of the rental amount we will guarantee that your rent is in your bank account on the first of the month and we will manage all legal communication with your tenant, should he fail to pay. We also cover the legal costs of evicting a tenant, should this be necessary.

*  In a previous article  we looked at all aspects of a good lease agreement. If your tenant has stopped paying his rent, you’ll be very glad you went to the trouble of drawing up a solid agreement.

The importance of a good lease agreement

 

Attention to detail is the name of the game when it comes to drawing up a lease agreement. A good lease agreement that satisfies the many legal requirements is invaluable in successfully renting out your property.

The lease agreement is the foundation of the agreement between owner and tenant. If there is ever a dispute and you need to go to court, it is the first document the court would ask for. The weaker your agreement is, the weaker your legal case will be.

Many property owners simply reuse their previous lease agreement or pop down to their local legal stationer and buy an off-the-shelf lease agreement. This, in our opinion, is a big mistake as these contracts are mostly very general and you are not guaranteed that they are up-to-date with current legislation.

There are two main Acts that inform RentMaster’s lease agreements: the Rental Housing Act, which focuses specifically on the rights of tenants and landlords; and the Consumer Protection Act (CPA), which was designed to protect the rights of the consumer – or tenant in this case. When drawing up a lease agreement one should bear in mind that anything specified in legislation will always trump anything you might specify in your agreement.

CONTRACT

At RentMaster our legal experts keep abreast of all the changes in legislation and new court rulings that may affect future tenant/landlord relationships, and as such you can be guaranteed a watertight lease agreement. And what’s more, it’s part of the service we offer and you don’t pay extra for it.

It is a good idea to consider the lease agreement as a living document, which you can update and amend as issues arise. Remember that any amendments you make need to be in writing and signed by both parties.

The term of the agreement

This defines the duration of the agreement, in other words the period that the agreement is valid. Most lease agreements provide for renewal after the term ends. According to the Consumer Protection Act (CPA) no lease agreement can have a term of longer than two years. Should your agreement be for, say six months, you have the option to renew it three times. After two years the landlord and tenant need to sign a new agreement – this is any case a good idea because then you get an updated agreement.

Cancellation vs termination

The CPA states that the tenant can cancel with 20 working days notice. If the tenant terminates before the end of the lease term, the Landlord is entitled to charge an early cancellation penalty. Generally, the landlord may not terminate the agreement early unless the tenant is in breach, has been properly notified and has failed to rectify the breach. The subject of notice periods is quite a complex one and we will dedicate a full future Nuts & Bolts article to it.

At the end of the lease

If the tenant stays on at the end of the lease with the express or tacit agreement of the owner and the lease agreement is not renewed, terms of the previous lease agreement remain in force with the exception that both the owner and tenant have the right to terminate with a calendar month’s notice.

If the lease has expired and a periodic lease is in place, the tenant can cancel on a calendar month’s notice, she will not be obliged to pay any early cancellation penalty. In other words, the Landlord has no claim or recourse against the tenant if he has costs such as advertising costs, agents’ fees or if he can’t find a tenant and is out of pocket.

It is always a good idea to have a written, fixed terms agreement in order to enjoy the benefits of the CPA – and to ensure that your rights are protected by an updated lease agreement.

The nitty gritty

A valid lease agreement must include the full details of both the lessor and the lessee including full name, ID number, address and contact details. All contracts should have a “domicilium” clause – a clause that directs how and where legal notices and Letters of Demand and/or Cancellation may be sent. If the information is not completed in full, this could cause time delays should you have to proceed with legal action against your tenant. Remember to also include the full details of the dwelling: erf number, street number suburb, city and postal code.

If there are occupants other than the lessee, it is a good idea to have their names and full details included in the agreement. It is also recommended to explicitly limit the total number of occupants and require the tenant to notify you in writing of any changes to the occupants. You should also state clearly if you don’t want the tenant to sublet.

Record the security deposit and rental amount to be paid with specific emphasis on the day of the month that the rent must clear in the owner’s bank account. It is generally a good idea to get a debit order authorisation from the tenant.

If the property is part of a community scheme such as sectional title or a homeowners’ association, it is important to record the tenant’s duty to comply with the rules of that scheme and to attach a copy of those rules to the agreement.

It is advisable to be very clear about the intended use of the property. In other words, state that it is for residential purposes and that commercial and any illegal activities are forbidden. You may also include restrictions on parking, pets access by visitors, etc.

Sundries

Any other amounts that you expect the tenant to pay, such as municipal services, gardening services, armed response services, lease administration fees, etc., must be expressly stipulated. It is important to note that the owner is always liable to pay rates and taxes. Many Landlords incorrectly assume that by registering the municipal services bill in the name of their tenant, they will not be held liable for payment, should the tenant fail to pay during their occupation. The owner of the property is always legally liable for the municipal services bill.

If you require the tenant to be responsible for specific maintenance on the property, such as the garden, gutters, etc., it should be explicitly stated in the agreement.

Dotting the I’s, crossing the t’s

The lease agreement must be properly signed – including the date and place by all parties and also properly witnessed. All pages of the contract and addenda must be initialled by all parties and witnesses.

Remember, if this sounds way too daunting, you can always task us to help you draw up a watertight lease agreement… and we’ll guarantee that your rent will be in your bank account on the first of the month!