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Why that lease you downloaded is not compliant

downloaded lease

Did you get a lease agreement from a local stationary shop or download one from Google? If you did, chances are that it is either totally non-compliant or is outdated.

This is according to Michael Bauer, MD of estate agency SAProperty.com, who says in the past few years the Rental Housing Act (RHA) and Consumer Protection Act (CPA) have had a considerable impact on consumer rights and on certain clauses within a residential lease. Clauses regarding cancellation notice periods or annual rental increases should be checked in case they are outdated or unlawful.

“Any lease drawn up should have terms acceptable to both the landlord and tenant, and both parties must be able to easily understand what their rights and responsibilities are,” says Bauer. “One of the issues that sometimes arises is that of lease renewal and yearly increases in rentals. Most leases in the past included a standard 10% year-on-year increase and most tenants nowadays would want to negotiate that percentage. In addition, the CPA prohibits ‘contracting out of law’, which implies that when a lease is signed at a certain rental for a specified period of time that is the rate that applies for that time. The new rate must be renegotiated.”

How to negotiate with leveragenegotiation table resize

Tenants who pay on time and in full, and who look after the property, should have better leverage to negotiate a fairer rental increase with their landlord; landlords would also be doing themselves by sacrificing a rental increase for a consistent and responsible tenant. This is because, according to TPN’s Q4 2016 vacancy figures, overall residential vacancies are sitting at 6%, with the R7,000 to R12,000 per month bracket at 7% and the R12,000 to R25,000 market at almost 10%. Some 82% of tenants are in good standing, which means almost 20% of tenants pay late or default completely.

“Another topic that is sometimes misunderstood is the cancellation of a lease,” says Bauer. “A cancellation clause is now sometimes omitted from residential leases as the CPA allows a tenant to give 20 business days’ notice to cancel at any time should the need arise, and the landlord is able to charge a reasonable cancellation penalty to assist in recouping the costs and damages suffered by the landlord of a prematurely cancelled lease.


When the early cancellation penalty is NOT CPA compliant


“It is understandable that situations sometimes change, like job transfers, split relationships or job losses. Any situation is best dealt with by speaking openly and honestly to each other as to why the lease needs to be cancelled, so that the landlord does not feel aggrieved and the tenant can move on without having to pay too large a penalty (or one altogether). In most situations, the equivalent of one month’s rental should be sufficient as a penalty for cancelling a lease.”

If both the landlord and the tenant understand their respective responsibilities, and if the lease is in accordance with all the new regulations, it will go a long way to forging a healthy relationship between both parties.

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david.steynberg@gmail.com

David A Steynberg, managing editor and director of HomeTimes, has more than 10 years of experience as both a journalist and editor, having headed up Business Day’s HomeFront supplement, SAPOA’s range of four printed titles, digimags Asset in Africa and the South African Planning Institute’s official title, Planning Africa, as well as B2B titles, Building Africa and Water, Sewage & Effluent magazines. He began his career at Farmer’s Weekly magazine before moving on to People Magazine where he was awarded two Excellence Awards for Best Real Life feature as well as Writer of the Year runner-up. He is also a past fellow of the International Women’s Media Foundation.

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