30 Aug 2013
As residential rentals surge in South Africa, increasing numbers of buy-to-let investors are putting themselves at risk for landlord-tenant difficulties if they don’t take the right precautions before signing a lease.
Claude McKirby of Lew Geffen Sotheby’s International Real Estate says a property is an investment that needs upkeep on an ongoing basis. In the case of a sectional title property, he says you’re entrusting it to a stranger when you rent it out.
“While an owner is ultimately responsible for the upkeep of a property, a negligent tenant could cause damage to the property, which could detrimentally affect its value.”
Mould on bathroom tiles that have not been properly maintained, broken floor tiles or neglected carpets and damaged fixtures can be costly to repair and replace.
In the case of non-payment of rent, which is the worst case scenario when it comes to problems between landlords and tenants, the financial losses incurred by sectional title owners can be substantial.
Landlords and tenants are both protected by the Rental Housing Act and sectional title owners should all familiarise themselves with it, as well as with the Consumer Protection Act, before letting a property.
Beyond that, there are a few more things you can do to protect yourself.
McKirby says the most important step to take is to have prospective tenants fill in an application form. A tenant application form asks for information from the prospective tenant including bank statements, copies of ID documents, employer’s contact details and residency history and references from former landlords, among other important information. It also lists certain conditions for rental, such as no animal policies, for example.
If you have potential tenants fill in an application form, you will be able to follow up on their references.
Every province in South Africa has its own housing tribunal, which provides a free mediation and advisory service to tenants and landlords throughout the region. The Western Cape Rental Housing Tribunal has advice common to landlords across South Africa: “Speak to the tenant's current landlord for a reference. It's also a good idea to speak to previous landlords, as the current landlord may give a good reference as a way to get rid of an unwanted tenant, and to get a letter from your tenant's employer to verify his permanent position and income.”
Ask questions like whether the tenant paid their rent on time, whether they gave the stipulated notice time before moving out, whether they caused any damage to the property and whether they were respectful of their neighbours.
The next step is to make sure they are financially solvent. In South Africa, debt levels are incredibly high, with one-fifth of credit-active consumers failing behind in repayments by at least three months.
This doesn’t bode well for the timely payment of rent. Payslips and bank statements included with the tenant application form aren’t foolproof indications of financial health. This is why talking with previous landlords is important.
The Western Cape Housing Tribunal suggests doing a credit check on a potential tenant.
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