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.


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.


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!

The Security Deposit

So you have a new tenant, they pay a month’s deposit and you pop it in your regular current account. When they move out, you fix what they’ve broken, deduct the costs from the security deposit and pay back what’s left. Simple, right? Wrong!

The handling of security deposits is one of the most frequent sources of dispute between tenant and landlord, most often because the correct steps as set out by the Rental Housing Act were not followed.

Not all damage is physical

Traditionally, landlords have considered the security deposit to be reserved for physical damage to the property caused by the tenant during their occupation. But did you know that the Rental Housing Act allows it to be used for any damages or losses that were incurred – including unpaid rent and any outstanding fees?

How much is enough?

Although a security deposit of one month’s rent is the norm, RentMaster sometimes requires additional security deposit. This happens in the following examples where the tenant’s profiling shows additional risk:

  • The tenant does not meet affordability criteria: the monthly rental amount is more than 33% of her net salary;
  • The income is not secure: the tenant is either self-employed or earns a commission that varies from month to mont;h
  • There are minor issues with the tenant’s credit history
  • The tenant is over-exposed in terms of other retail credit commitments.

If the tenants cannot afford the deposit, often because they are required to put down the deposit on a new property while the previous deposit is still being held pending conclusion of the existing lease, they can apply for Deposit Assistance. This is offered by some financial institutions in the form of bridging loans and RentMaster can assist in applying for this where required.

Initial inspection

Before the tenant moves in the tenant and landlord or his mandated agent must inspect the property together to identify any defects or damage to the property. These need to be documented and signed by both parties. RentMaster supplies all the required documentation to facilitate this.

Don’t touch it!

Once the deposit has cleared into the landlord’s account, keys are handed over and the tenant is free to move in. The Rental Housing Act requires that the security deposit be kept in a separate interest-bearing account. Many landlords make the mistake of using funds from the security deposit during the tenant’s occupancy. This is not allowed, not even when the tenant has not paid rent or has damaged the property.

Exit inspection

Once a tenant has given notice, the landlord and the tenant must attend a site inspection together. The Act says it must occur in the last three days of occupancy. This is of course very difficult to do – the tenant has his hands full with packing and the landlord would like to inspect the property without any of the tenant’s possessions in the way. And so the site inspection often does not take place, which, according to the Act is deemed to be

“acknowledgement by the landlord that the dwelling is in a good and proper state of repair and the landlord will have no further claim against the tenant who must be refunded… the full deposit plus interest”.

The Act does however provide for the event where the owner attempts to hold the inspection but the tenant fails to attend.

“should the tenant fail to respond to the landlord’s request for an inspection… the landlord must on expiration of the lease. inspect the dwelling within seven days from such expiration in order to assess any damages or loss which occurred during the tenancy”

At RentMaster we make sure that both the initial entry inspection and the exit inspection do take place. Any damage to the property that can be shown to have been caused by the tenant that was not recorded during the initial statutory entry inspection, can be repaired and the costs deducted from the deposit. This does not include fair wear and tear or structural defects. (We will dedicate a future Nuts&Bolts article to the topic of maintenance and damages.)

When must the deposit be repaid?

If there were no damages to be repaired and there is no unpaid rent or outstanding fees, the deposit must be paid back within 7 days of the end of the lease. If there are damages, the property owner has fourteen days to repay. RentMaster will first pay the owner the costs of repairing the allowable repairs, then we will settle any unpaid rent, and finally we will settle any outstanding fees which can include municipal services, debt collection costs and amounts due to the agent as per the lease agreement.

What about the interest?

The tenant can expect to receive the same amount of interest that a 30-day savings account at the bank would accrue.

Is it legal for the tenant to use the deposit as the last month’s rent?

Absolutely not. The Act clearly specifies what the deposit is to be used for. Any tenant who does so risks being black-listed with the credit bureaux.

Is there an easier way?

Sure! Speak to RentMaster and we’ll guide you every step of the way.

Choosing the right tenant – your best time investment ever

In the first of a series about the nuts & bolts of successfully renting out your property, we look at why tenant profiling is so important and how to read between the lines of a tenant profile. We’ve all heard nightmare stories about delinquent tenants, but there are many steps you can take to mitigate against this risk. At Rentmaster we study all aspects of an applicant’s financial situation to build up a reliable picture of their suitability.

The first thing we look at is the applicant’s credit-worthiness. We do this by drawing a TPN credit report. TPN is a credit bureau that specialises in property rentals. The report will reveal the applicant’s payment history – has she paid her bills on time or does she habitually pay late? Perhaps she only makes part payments? Any judgements of debt against the applicant will also be included in the TPN report.

The next important issue is affordability. As a rule of thumb, the applicant’s payslip must show that she earns at least three times the rental amount. It is more difficult to determine affordability if the applicant is self-employed and therefore doesn’t have a regular income. In this case we like to dig a little deeper and we might ask for the company’s bank and financial accounts. Similarly, if an applicant earns commission we might ask for twelve months’ bank statements to build a better picture.

The report also contains her retail credit commitments – credit cards, vehicle finance, store cards, mobile phone accounts, unsecured loans  – any debt that she has to pay off on a monthly basis.

Step three is to compare the information from the credit report and the affordability test with the financial declaration on the application form. It is important that there is no contradictory information – if there is, we may request more information or, if we suspect that the applicant has been untruthful, reject the applicant.

Choosing the right tenant is one of the most important steps in the property rental game.


Properties that offer ‘walkability’ command a premium

The advent of the Gautrain has seen prices of apartments in the Rosebank area increase by at least 200% since 2010. This is in keeping with a global demand for properties that offer of “walkability” – the ability to get around without a car, says Berry Everitt, CEO of Chas Everitt International property group.

“Areas closest to the stations have also sprouted new shops, offices and recreational facilities,” said Everitt.

This trend is evident all along the Gautrain line. In Hatfield, Pretoria, the price of flats close to the Gautrain terminus has risen by an average of 33% since 2010. “And a the other end of the line in Johannesburg, flats close to the Gautrain terminus at Park Station, Braamfontein, have achieved an average price growth of 59% since 2010,” said Everitt.

“A large percentage of home buyers want to leave their car in the garage most of the time – or even live without a car – and are prepared to pay a premium to do so.”

Walkability offers many benefits, both to residents and neighbourhoods. For starters, taking regular, is a low-impact form of exercise that has been proven to offer great health benefits. Increased pedestrian volumes in a neighbourhood can also improve community safety and social integration. Local businesses also stand to benefit from increased passing foot traffic.


SA consumers resort to revolving credit to afford the basics

If the first six months of 2016 are anything to go by, property owners should ensure that they have done all their homework to secure their rental income. Like getting Rentmaster to take care of it all.

As South Africans are becoming increasingly indebted, a growing percentage of income goes to servicing that debt, thereby putting greater pressure on their ability to afford the basics like rent. This trend is confirmed by the alarming 12.3% increase in tenants who did not pay their rent between December 2015 and March 2016. *

Middle income South Africans are increasingly resorting to using credit cards and store cards to maintain their living standards. This is according to the TransUnion’s latest consumer credit index, an indicator of consumer credit health.

While the index is only marginally up from the first quarter of 2016 (47.1 as compared to 46.5), the year-on-year trend does not look rosy, dropping from 55 to 47 points — a 15% decrease. **

“What we’re seeing is that economic conditions, job losses, and inflation are really weighing down on consumers and their ability to pay their bills”, said Geoff Miller, TransUnion Africa’s regional president.

According to economist Russell Lamberti, “Middle- and lower-income households were most severely affected by deteriorating household credit health”. This trend is due to those households having more exposure to unsecured lending. “During challenging economic times these households often utilise revolving credit to augment their disposable income.”

*TPN Rental Monitor, Q1 2016

**The CCI is an indicator of consumer credit health that measures the ability of consumers to service existing credit obligations within the constraints of their monthly household budget. It is based on a 100-point scale, with 50.0 the break-even level between improvement and deterioration of credit health. Any number above 50 means that consumer credit health has improved over the past year.

It measured through:

  • Loan repayment records
  • Use of revolving credit
  • Estimated household cash flow
  • Relative cost of servicing outstanding debt

Worsening economic conditions impact on rental payments

There is now no doubt that the economic conditions have deteriorated to a point where we can expect an increasingly risky time ahead for the rental industry. The pointers are clear:

  • Non-, partial and late payment trends are all up according to the latest TPN Rental Monitor (ww.tpn.co.za)
  • Tenants in good standing are down 2.8%
  • New car sales are at an 8-year low and there has been a 20% increase in people that have fallen behind with their vehicle finance paymewnts.
  • The economy is shrinking in real terms and people are loosing their work
  • Interest rates will probably continue to climb for a while still

Why not shift these burdens and risks to RentMaster. We’ve been making sure investors receive their rent on the 1st working day for more than a decade. Guaranteed

RentMaster’s complete management solution for the monthly rental collection cycle offers peace of mind to owners and agents.

Proposed changes to the Rental Housing Act

Changes to the Rental Housing Act have been tabled in parliament by Minister of Human Settlements Connie September. It is one of the priority bills that must be passed into law before the May 2014 elections. It deals with several proposed changes, notably that all leases must be in writing, and addresses some of the much criticised deficiencies of the Rental Tribunals.

The Rental Housing Act is the foundation for the maintenance of good relations between owners and tenants, and the enforcements of their respective rights.

As the law currently stands, an oral or tacit agreement between a landlord and a tenant is valid and enforceable. The law does provide that the tenant must be provided with a written agreement if it is required. Oral and tacit agreements are often problematic as they require oral evidence if disputes end up in court, resulting in long waiting periods for court dates and increased legal fees, not to mention the wide margin for disagreement in the respective interpretation of such agreements. A related problem with the current dispensation is that often the written agreement lapses or is amended, but the renewals and/or changes are not recorded and the written agreement brought up to date, resulting in the same risks.

When the new law comes into effect, it places an explicit obligation on the landlord to produce a written agreement. Furthermore only written agreements will be recognized and be enforced by a tribunal or court – oral agreements will not be recognised. The minister will also be required to publish a proforma lease agreement in all official languages that will make it easier for parties to adapt it to their particular requirements while ensuring that the requirements of the Act are complied with.

Dr Sayed Iqbal Mohamed, Chairman of the Organisation of Civic Rights, whose publications at www.ocr.za served as a source to this article makes a further recommendation:

  • It would be prudent to include a mandatory clause that any change or alteration verbally made to the lease must be reduced to writing (non-variation clause) for such change or alteration to be valid.
  • In the event of a dispute, neither tenants nor the landlords can claim that he or she had agreed to certain changes verbally. In other words, this clause states that any variation to the lease agreement would be of no effect unless reduced to writing.
  • ‘The rule is that when a contract has once been reduced to writing, no evidence may be given of its terms except the document itself, nor may the contents of such document be contradicted, altered, added or varied by oral evidence.’

The Bill will also set out to enhance the effectiveness of the Rental Housing Tribunals by

  • Extending on their powers to further balance the rights, duties and obligations of tenants and landlords, specifically by granting powers of spoilation, interdicts and attachment. It must be noted that eviction orders were specifically excluded due to the s26 provision of the Constitution.
  • By imposing a duty on MEC to establish the required tribunals
  • Introducing an appeals process and the provision for a tribunal to withdraw or change their rulings.

Finally the Bill will set out the respective duties of landlords and tenants more clearly, address loopholes identified and generally address problems identified in the rental sector during the public participation process. It will expand on the definition of “unfair practices, which will be accompanied by Unfair Practices Regulations to be published shortly for public comment.

The realm of laws relating to residential rental property is a complex and evolving landscape, and any developments to offer improved and faster relief to aggrieved landlords and tenants are very welcome.

Parliament approves credit amnesty: Now what?

Despite very vocal opposition from the credit granters, parliament last week approved in principle a second debt amnesty programme for South Africa.  The aim is clear:  debtors who have paid back their debts must be removed from the black-lists. Period. While the intentions are noble, the devil remains in the detail. We will have to wait for the programme to be gazetted to find out which of the three ring-fence scenarios presented will actually be implemented.

Detractors of the amnesty point out that lessons learned from the previous amnesty in 2006 haven’t been heeded. Industry reports indicate that the majority of those who benefited from the first amnesty have again ended up in a debt trap of some sorts. They cynically point out that it is nothing but a political tactic in the run-up to the 2014 elections. Voters don’t bite the hand that feeds them, so to speak. The Business Day editorial sums this up nicely: “A blanket amnesty is a short-term, populist band-aid that will not solve the underlying problem — people are being granted loans they cannot afford to repay. “

As always there is the contrasting view and for a welcome change it’s not only the government that is putting forward the upside. Moneyweb’s Sipho Ncobo’s opinion is that the lenders’ reaction is an unnecessary uproar that has sparked pointless controversy, and is plain dishonest.  He writes about the “life sentence” of bad credit records, the nightmare of trying to have outdated information removed and the millions of people who struggle to get traction in the economy due to some historic issue way back when.

Trade and Industry Minister Davies says that this will force the lenders to do proper affordability tests and not just rely on “outdated and misleading” historic information kept by credit bureaux.

The National Credit Regulator (NCR) company secretary Lesiba Mashapa, also supports the amnesty: “We believe it is the right intervention.”   He points out that the regulator will soon publish affordability assessment guidelines, which when coupled with  payment profile information which will not be removed, will allow for the proper assessment of risk.

Overall the challenge remains to stamp out reckless lending and to boost economic activity by assisting an estimated 1.6-million consumers struggling to get loans, accommodation and jobs due to adverse historic credit records despite having repaid their debts.

Our view at RentMaster leans towards the positive responsible lending strategy. As the pioneer of guaranteed rental collection in South Africa, we have learned our own lessons over the last 10 years about how best to deal with people in financial distress, how to manage our own credit risk and how to work with our industry partners in building a knowledge base of good and bad behaviour.

While we do make use of credit scoring and historic default reports provided by the bureaux, this makes up a relatively small part of our robust tenant screening process. We place a lot of value in the tenants previous rent payment history kept in the widely-supported Tenant Profile Network, and then very thorough employment reference and affordability checking.

Deon Botha


Founder and CEO