Experts unpack residential rental challenges
While the demand for residential rentals in South Africa is rising, so is the number of defaulting tenants. The depressed economy, interest rate hikes, and the pandemic’s lingering impact on jobs and income, are contributing to an increasing number of South Africans failing to pay their rent, according to attorney and rental property specialist Marlon Shevelew.
In a recent webinar, Shevelew and specialist sectional title attorney Marina Constas shared their insights on residential rental challenges. Shevelew revealed that his firm is doing around 40 residential evictions a month, and that non-paying tenants are the biggest issue in the rental property arena. The next big concern that he cited was landlords who are too “robust” and rush into suing or evicting defaulting renters. “This is not the ideal first course of action. Evicting someone and suing them costs money. No court will award you the costs that you had to pay your attorney. Negotiation may be wiser, and landlords should be mindful of this,” he stressed.
Shevelew noted, however, that contrary to popular opinion, it is not impossible to evict tenants. “It is difficult. The paperwork is onerous, and your application must be precise. The eviction starts long before court papers are drawn up, with a letter of demand. The period of time stipulated in this letter of demand will vary based on whether the tenant is a natural person or a juristic entity. If the law is meticulously followed and the lease is formally cancelled, you can successfully obtain an eviction order. There are many factors that will be considered, including whether the tenant has alternative accommodation, and it may take a judicial officer some time to give you that court order, but it is possible,” he stated.
A sectional title complex adds additional complexity to the landlord-tenant relationship, involving not only the property owner and tenant but also the body corporate and trustees. In complexes, issues with tenants include not just non-payment but also their failure to comply with the rules.
Owners who rent out sectional title units must be ultra vigilant and screen tenants thoroughly because they will take the rap for tenants’ bad behaviour, and may foot the bills, cautioned Constas, who is a director at BBM Law. “When it comes to a sectional title complex, the buck stops with the owner. It is the property owner’s responsibility to ensure that his tenants, their employees, family members and guests all comply with the complex’s rules.”
Economic challenges, rising crime rates and unemployment in South Africa are leading many people to opt for secure, affordable rental homes in sectional title developments. Investors are capitalising on the trend but are often naïve to the challenges of renting out property in a sectional title scheme. Constas explains that there is no legal connection between a body corporate and a tenant. “This means that any transgressions or misconduct would be taken up against the owner who would be liable. For example, if your tenant’s inebriated visitor accidentally damages the main gate, you will be directly liable to the body corporate for the costs of repairing it. You may have legal recourse against your tenant and their visitor, but the body corporate will claim directly from you. In terms of South African law, a body corporate cannot evict a tenant.”
Constas says that some overreaching trustees have approached her to ask if they can vet prospective tenants, but this is unreasonable and illegal. “I recommend that the conduct rules of a complex include a clause stating that it is compulsory for a landlord to attach these rules to the lease as an addendum, and to include a provision stating that the tenant is bound by the rules of the complex. In this way, the landlord can say that the lease has been breached if his tenant contravenes the rules.”
While rental agents are often responsible for tenants’ application screening on behalf of owners, including background and credit checks, Shevelew noted that, in his experience, rental agents do not always know the law. “Many sets of legislation apply to the rental arena. Rental agents must be sure that what they are communicating to tenants is correct and legal. For example, there have been cases where they have assured tenants that late payments are acceptable and set a dangerous precedent.”
“The bottom line is to choose your rental agent carefully, but, more importantly, know your tenant,” Constas stressed. “Choosing the wrong tenant can lead to numerous headaches, including financial losses and potential legal issues. It can even threaten the safety of other sectional title residents. A case in point is one in which I was asked for advice when the trustees and body corporate of a complex in Johannesburg became increasingly concerned about a tenant’s suspicious activities. He was a renowned crime and kidnapping kingpin who was eventually arrested.
“There are also cases where non-paying tenants have been dubbed ‘residential mafia’ and it is very difficult to evict them. One eviction case in a sectional title complex in Fourways has been going on for four years now. During this time, the owner’s income and property value has been impacted as the non-paying tenant is also not taking care of the unit. By knowing your tenant, especially in the context of sectional title living, you can ensure that your rental property does not become a thorn in your side and in that of the body corporate.”