Maispace Rentals,Sales and Management

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Private letting 'a risky business' With demand for rentals increasing rapidly, investors who bought to let during the boom will realise a substantial return on their investment. But letting property out privately is a risky business, and owners should consider their options carefully before deciding to become landlords. The ongoing interest rate hikes and overall inflation have resulted in sudden growth in the demand for rentals countrywide. Property owners who are able to keep their properties can now expect a much better return on their investments, provided they can get suitable tenants and manage the process."There is a strong trend amongst private owners to handle the rental of their properties themselves," "This is understandable, as too many owners have in the past had bad experiences with using rental agents."But that need not be the case. A reputable rental agent or real estate group that does the job properly can save the would-be landlord many hours of frustration and effort, and prevent the problems that go with choosing the wrong tenants. "It's not just the tenant's financial position that needs to be checked out," You need to verify previous tenancies, the person's history in maintaining a rented property and whether or not he usually pays on time." "There are many cases on record of tenants whose financial position is excellent, but that does not stop them from neglecting or possibly destroying the property, refusing to pay, disappearing for weeks at a time without notice or even sub-letting to others who may not be the sort of people you want in your property."All too often, private landlords make use of a standard lease agreement that doesn't make provision for some of the issues that can arise. The landlord may not take the time to conduct the required pre-occupancy check with the tenant, and then he has no recourse when the tenant moves out and claims the damages left behind were there at the outset. And how often does a private landlord let the lease agreement go on to the famous 'month-by-month' rental once the initial lease period is over – leaving himself wide open to the almost impossible task of evicting a tenant who has stopped paying his rent and with whom he no longer has a valid lease in place?"This can create a particularly difficult situation,especially if a new bill tabled in Parliament is passed that says that a tenant who stops paying rent cannot be regarded as an illegal occupier and therefore cannot be evicted. In terms of the bill, only land-invaders are now regarded as illegal occupiers, and non-paying tenants must be removed using alternative legislation."The Amendment Bill to the Prevention of Illegal Eviction From and Unlawful Occupation Of Land (PIE) Act was presented in Parliament in March by Housing Minister Lindiwe Sisulu. It amends the 1998 Act, which a memorandum accompanying the bill says was subjected to "various implementation and interpretation problems". South African television viewers have seen several instances of tenants who could not be evicted because the landlord was required to make provision for alternative accommodation for them, in terms of the PIE act. Salvatore Puglia, a Cape-based attorney who specializes in such cases, said that "the law is under review as the courts have recognised that the PIE Act is being abused by people who want to get away with not paying rent." According to the Literature Review of Small Scale Landlords report on a 2006 research project, there are additional risks faced by private landlords in South Africa. These include the hijacking of the premises by warlords and criminals, dysfunctional body corporates in sectional title complexes that result in the non-payment of essential services and a lack of maintenance that undermines the value of the property, and the frequent mismanagement by council of the collection of payment for utilities, which can lead to debt in the name of the landlord. Then there is the matter of inspecting the property. The Rental Housing Act stipulates that 'the tenant has a right to privacy' so it becomes difficult for the average person to insist on agreeing a date and time to inspect the property. Not so for the experienced rental agent, however. "Our contract includes a clause that states we are entitled to inspect the property upon 7 days written notice to the tenant," says the CEO of one of SA's largest companies specializing in rentals. "We enforce these inspections at least twice during each lease period on all rentals we manage, as nipping potential damage in the bud is easier than trying to repair it after the fact.""These are just some of the pitfalls faced by private landlords Of course, there are rental tribunals in Gauteng, North West and the Western Cape that have been created to address many of the problems of private landlords and tenants, and they have the power to make a ruling that carries the same weight as that of a magistrate's court. Offenders can be fined if found guilty or sent to prison for up to two years."But it's not an easy process dealing with the tribunals. Complaints have to be submitted in writing and the tribunals take time to investigate them and then try to resolve them amicably before making a finding. Issues are dealt with in terms of the Rental Housing Act No 50 of 1999, and only apply to written and verbal lease agreements entered into after 1 August 2000. "All these issues make the commission and fees charged by rental agents a drop in the ocean by comparison," With the trend in rentals looking set to continue for the next 18 months, owners should ensure that all loopholes have been covered if they want to enjoy quality tenants and regular returns from their investment properties."