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Here’s how the CPA changed the way rental agents do business

Rental agent

The Consumer Protection Act 68 of 2008 (CPA) changed the way in which rental agents do business. Agents now not only have to ensure compliance with their duties in terms of the Estate Agency Affairs Act 112 of 1976, but also have duties to the landlords and agents that they do business with. What’s more, these duties are applicable, regardless of whether there is a contract between the tenant and rental agent.

Marlon Shevelew, rental attorney of Marlon Shevelew and Associates Incorporated, says that a rental agent is always acting in the ordinary course of his business and will be treated as a supplier in terms of the CPA.

“The agent needs to follow consumer law and need not be letting his own property to be viewed as a supplier,” explains Shevelew. “Simply receiving remuneration to assist a landlord in finding a tenant would be sufficient to make the rental agent a supplier.”

Shevelew reminds that it is furthermore important that a rental agent considers and treats both the tenant and landlord as consumers in accordance with the requirements of consumer law. This means that there are certain guidelines for how a rental agent should act throughout the course of the professional relationship with a landlord and tenant.

When marketing your services to, and contracting with landlords:

Rental agents should ensure that any advertising and marketing to potential landlords are clear, accurate and not misleading. Material information should not be omitted from this initial contact – it is especially important that the service and fee that will be charged is clearly set out. “Rental agents are most likely to ensure compliance to this aspect of consumer law if they set the information out in a clear tariff of charges that landlords can easily access that is inclusive of VAT” advises Shevelew.

Rental agents must furthermore ensure that the terms of any contract used are clear and without hidden surprises. “The contract should be fair,” says Shevelew. “Unusual or onerous terms should be set out prominently. And when you start formally acting as the landlord’s agent you need to ensure compliance with all the legal duties. Take proper care of their money, disclose any commissions received and provide accurate advice on compliance with the law.”

When advertising and providing information to potential tenants:

The rental agent must ensure that they have the processes and information in place so that tenants’ questions can be accurately answered and to avoid any scenario in which the tenant could feel misled. This includes the advertising the rental agent uses – it needs to enable a tenant to make clear and informed decisions about the property you are marketing. This means that advertising should provide the potential tenant with sufficient information on costs and charges so that the tenant can compare properties before making a decision.

Note: Information that cannot be included, due to restrictions on space, is clearly flagged and made easily accessible (for example, no more than one click away on a website).

When negotiating and signing the lease agreement:

As the rental agent you must ensure that the tenant you are dealing with fully understands the nature of your role and that the prospective tenant has all possible and reasonable information on the property you are marketing.

Once the prospective tenant has indicated that they would like to apply for the property the agents must disclose all reasonable information about pre-tenancy checks, ranging from what the checks will entail to how much it will cost. At this stage it is also important to disclose how much the security deposit will be and the circumstances under which it may not be refunded.

Before the tenant signs the contract ensure that they have had enough time to familiarise themselves with it and that the contract is fair.

When the tenant takes occupancy of the property:

The rental agent must ensure that the property is available for the tenant on the date agreed; alternatively the tenant must be informed of any delays. Once the tenant takes occupancy of the property the agent must ensure that the property confirms to all statements about its specifications, including any renovations or upgrades that had been agreed upon. It follows that the agent must provide the tenant with all material information on the condition of the property, along with other material information.

At this stage of the transaction it is also the agent’s responsibly to ensure that the deposit is properly protected and that the tenant is given information on where the deposit is held and terms on repayment.

Managing the property after the tenant has moved in:

The rental agent has a duty to both the landlord and tenant to carry out contractual duties timeously, using reasonable skill and care. In dealings with the tenant the agent must be fair and avoid enforcing unfair terms. The tenant must at all times have clarity on who is responsible for doing what. At the same time the agent must do what is expected under the contract with the landlord – the landlord must at all times be informed and enjoy the proper care of their interest.

On renewal or termination of the lease:

The rental agent must ensure that the tenant has clear, accurate information about what is needed to give notice and alert the tenant if this process is not followed correctly. It is also important that the agent acts consistent with information already given to the tenant on fees for renewing or exiting a lease agreement at the pre-contractual stage. And finally, be clear and upfront with the tenant on whether any money from the security deposit will be withheld and explain how much.

Considering the scenarios described above it becomes clear that there are many practices that could potentially fall foul of the CPA, making it essential for rental agents to familiarise themselves with the requirements of consumer law.

The advice is an adaption of some of the guidance which has been prepared by the Competition and Markets Authority, UK in their “Guidance for lettings professionals on consumer protection law”, which apply equally to the CPA and rental agents in South Africa.
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