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Monday Feb 20, 2012

Tenants vs landlords: Concourt mulls whose property rights take precedence

In a case brought to the Constitutional Court, a group of ousted tenants claimed their right to adequate housing was violated by the owners of their building, Aengus Lifestyle Properties, which cancelled their leases and raised rents by up to 150 percent.

The tenants at Lowliebenhof in Smit Street, Joburg, argued that the cancellation was not compliant with their lease agreements. They claimed that the impact on the tenants would decrease their quality of life and leave seven of the group homeless.

The Inner City Resource centre submitted that the landlord's right to increase its profit was not a plausible reason to deprive tenants of their rights. The lease cancellation and increased rent would have a disproportionate impact on the tenants and was tantamount to unfair practice.

Aengus, a company that focuses on inner-city revitalisation and developing upmarket living spaces in Joburg, argued that its action was compliant with its contractual obligations under the cancellation clause in the lease agreement.

It also said it was compliant with the Prevention of Illegal Eviction Act, which specifies that landlords can evict tenants only if they have alternative accommodation. Aengus said it offered each tenant alternative cheaper accommodation and three months' notice of cancellation. Residents were also offered new rental amounts in new leases.

Michelle Dickens, managing director at TPN property credit bureau, says: "Eviction procedures have often been the subject of SA court cases and each outcome has the potential to inform future rulings and stipulations. If the court finds against the landlord, cancellation of leases, even when done within the terms of a lease agreement, could be set aside as unfair or unreasonable.

"As Aengus took these measures to increase its profit, this case sets the rights of tenants to adequate housing against the landlord's right to pursue profit. The big questions in this case are: who is responsible for the social costs of cases like these; do constitutional rights exceed contractual rights; and how should the rights of tenants and landlords be balanced when situations such as this one arise?"

She says that in a developing economy and industry, capital accumulation is vital to the regeneration of areas like Joburg's inner city. Although this may cause hardship for certain tenants, the long-term effect will create wealth and generate economic progress, ultimately benefitting all sides.

The tenants escalated their case against Aengus, starting at the Rental Housing Tribunal, moving on to the High Court and Supreme Court of Appeal and now to the Constitutional Court. The parties are awaiting a decision from the Constitutional Court, where judgment has been reserved.

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