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Monday Mar 13, 2017

Changes to laws make rental contracts more complex

Until a few years ago, lease agreements included standard annual increases and a seven-day's notice with material breach to terminate.

But this is no longer the case, says Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty.

Contracts have become more complex with amendments to the Rental Housing, Consumer Protection and National Credit acts that now affect almost every aspect of rentals.

Landlords and tenants must understand certain basic facts, says Shaun Groves, Gauteng rental manager for Lew Geffen Sotheby’s International Realty. These include:

  • Deposits:

    Landlords are required to keep the tenants’ deposit in a bank account and rental agents must place the deposit in a trust account.

    Deposits must be paid into interest- bearing accounts and interest accrued must be included in deposit refunds.

    Tenants’ deposits should only be refunded at the end of the lease period after a joint inspection of the premises.

    Incoming and outgoing inspections must be attended by the landlord or agent and the tenants, to establish the condition of the property and who is responsible for which repairs.

    The inspection report is then signed off by both parties.

    If the landlord or agent fails to carry out these inspections with tenants, it’s assumed the property is handed over in an acceptable condition and landlords may not deduct money for repairs from the deposit.

    If there are no deductions from a deposit, landlords must issue a refund within seven days of the inspection, and if repairs are necessary the deposit minus deductions must be refunded within 14 days of restoration of the dwelling.

    If tenants refuse to attend an inspection, though, the landlord will have 21 days to transfer the refund.

  • Erica de Kok of Lew Geffen Sotheby’s International Realty in Camps Bay.

  • Maintenance:

    This needs to be clearly defined in the lease.

    Landlords are responsible for the main structure of the home, but they can’t be expected to replace worn tap washers and light bulbs.

    Landlords must offer the property for rent in a “reasonably fit” condition, and maintain the property in accordance with health and safety standards and any local laws and regulations.

    When it comes to refunding the deposit, though, wear and tear is accepted, and the landlord can’t expect tenants to fit new carpets after a few years of renting.

    Lorraine Dellbridge, rentals manager for Lew Geffen Sotheby’s International Realty in Cape Town’s southern suburbs, Noordhoek and False Bay.

  • Lease renewal and rent increases:

    The days of standard 10% year-on-year increases are long gone. If landlords are not open to negotiation, they risk losing stable, reliable tenants.

    Rent hikes must be negotiated.

    Tenants’ negotiation leverage depends largely on what kind of tenants they have been; those with a history of regular rental payment and upkeep of the property have the advantage.

    Tenants should include up- to- date credit reports to motivate their renewal.

    Negotiations are a two-way street that must benefit both parties. Instead of simply asking for a reduction, tenants can perhaps offer to take over payment of the garden or pool service or perhaps offer to repaint the interior in a colour of the landlord’s choice in exchange for a reduced rental increase.

    Shaun Groves, Gauteng rental manager for Lew Geffen Sotheby’s International Realty

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