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Protecting your Rental Property Investment in the current market (Part 2)

By – Harry Meyburgh, Director at Etchells & Young

Last month we discussed 5 Keys in Protecting Your Rental Property Investment – read that Blog now  – in a market that is coming under a bit of pressure.  According to TPN (www.tpn.co.za), Tenants in Good Standing in Gauteng have decreased from 86% in 2014 to 82% in Q2 2017. This data supports our view that tenants are finding it a bit more difficult to pay the rent on time and in full every month.

In this article we take a closer look and go into a bit more detail about how a Landlord can better protect his property investment by discussing factors that you can control.

Repairs and Maintenance – a large part of protecting your property investment is to keep the property in a good state of repair and to deal with maintenance items quickly and property.  After all, if a property slowly deteriorates and starts looking grubby and untidy, it will attract tenants who don’t care what the property looks like and it will get worse.  As astute property investors know, they must budget for and spend some money on maintenance and upgrades from time to time so that the property remains attractive and desirable to good tenants.  Whilst tenants are responsible for the maintenance and repairs of certain items in the property (should be specified in the lease) these generally are direct damage caused by the tenant (accidently or other), damage due to neglect or misuse, regular maintenance of an item to keep it functioning normally and all cleaning. The Rental Housing Act also specifies that a landlord must do the following with regards to repairs and maintenance:

  • Let a property that is reasonably fit for human habitation
  • Keep and maintain the property that way
  • Take reasonable steps to ensure that the tenant enjoys undisturbed use of the property
  • Maintain the outside of the property, walls and roof in good order and repair
  • Maintain electrical, plumbing, sanitary, heating, ventilation, air conditioning systems (as applicable) in good order and repair
  • Repair any damaged caused by fair wear and tear
  • Provide all services as per the lease agreement
  • Effect repairs (for which the landlord is responsible) within 14 days after receipt of a notice from the tenant to do such repairs

This may seem onerous and one-sided, but most of the above items are covered by your insurance when things go wrong – so be sure to keep adequate insurance cover in place!  As for fair wear and tear, these are items that become damaged or defective as a result of their normal use over time and then need to be repaired or replaced.  These are costs that the landlord must be prepared to cover and are part and parcel of being a property investor.

Being fair and reasonable when responding to maintenance request by the tenant will always go a long way to ensuring that a good relationship is maintained and that is a very important consideration in ensuring a good return on your investment.  A happy tenant is much more likely to stay on in your property and keep paying the rent!

Don’t take the law into your own hands – it may be very tempting to find a quick fix to your problem if a tenant does stop paying the rent or breaches the lease in another way, but the only sure way of fixing the problem properly and permanently is to follow the correct legal steps, even it does initially cost money and takes longer than you would like.  If you are going to change the locks, cut services such as water & electricity, intimidate, forcibly remove the occupants or move someone else into the premises, this is legally called spoliation or unlawful dispossession and will likely result in a court order being brought against the Landlord and occupation being given back to the tenant at the cost and expense of the landlord.  Crazy hey, the tenant has after all not being paying rent and now you will have to pay his legal fees to get him back into your property!  Then when the landlord approaches the court for an eviction, the case will be immeasurably more difficult to win because of the spoliation and will put the landlord in a very bad light in the eyes of the court.

Rather follow these steps:

1.       Try to compromise and find an amicable solution to the problem if at all possible.

2.       Follow the correct legal steps at the same time, starting with a correctly served notice of breach or letter of demand.  Give the tenant the legally required 20 business days (as per CPA if he is a natural person) to remedy the breach and if the tenant does not remedy the breach, cancel the lease – again by the correct legal notice and only after the full 20 business days have lapsed.

3.       At this point you must be prepared to take decisive action if the tenant is being unfair, unreasonable and still not responding to the breach notice or letter of demand.  If your property is being managed by an estate agent, they should be handling this for you and will also providing advice and communicate any progress.

4.       Contact a good property attorney as soon as it becomes apparent that the tenant is not going to remedy the breach and is likely to remain in the property illegally, so that they can start the eviction process according the stipulations of the PIE Act and obtain the required court order.

See also this article: https://formfactory.co.za/expert-tips-on-eviction-process/

Did you know?

That it is unlawful (in terms of the Rental Housing Act) to charge a penalty for the late payment of rent, whether or not the penalty takes the form of an administration charge or any other form, other than interest….

Any questions, queries or suggestions – please feel free to email me: [email protected]

Something new next month!

The article below on Private Property highlights some of the aspects that we have been discussing and is worth the read!

https://www.privateproperty.co.za/advice/property/articles/9-qualities-tenants-look-for-in-a-landlord