Lease protection under the Consumer Protection Act

Lease protection under the Consumer Protection Act

MAIN IMAGE: Marlon Shevelew, director Marlon Shevelew and Associates.

Under the Consumer Protection Act (CPA) a tenant may legally end a lease prematurely, subject to giving sufficient notice etc – are there situations where the landlord could also legally refuse to accept the tenant’s lease cancellation?

In 2020 it is a renter’s market in South Africa – with the current oversupply of accommodation tenants generally can have their pick of where they want to stay. Tenants, especially good tenants, are also hard to come by and landlords know this. The 2018 PayProp Index classified more than a third of tenants in South Africa as high risk.

Risk management is a top priority for landlords and rental agents. It is under the circumstances understandable that a landlord may want to try to prohibit a good tenant, that wants to cancel a lease prematurely, from doing so.

The Consumer Protection Act states that a tenant may legally cancel a lease agreement if he gave 20 business days’ notice. Some landlords may want to argue that the Act doesn’t apply to them as they don’t rent out property in the ‘ordinary course of business’ – how should a rental agent handle such a dispute?

Other issues that rental agents have also come across include what rights, if any, does the landlord have if the rental agent was paid renewal commission? Can a landlord under such circumstances expect the agent to find a new tenant free of charge? May the landlord insist that the tenant secure a new tenant before acceptance of the cancelled lease?

Marlon Shevelew is a legal expert on residential property law. Property Professional asked him to weigh in on the matters raised above.

Shevelew begins his comments by saying the point of departure of the Consumer Protection Act 68 of 2008 (“CPA”) is that, in terms of section 5, it applies to every transaction occurring within South Africa unless it falls under one of the exemptions listed in section 5(2), (3), or (4) of the CPA.

There are only two specific exemptions that are relevant to leases: leases where the state is the tenant and leases where the tenant is a juristic person with an asset value or turnover in excess of R2 million.

“What I mean is if the state is a tenant – i.e. the landlord leases to the government then there is no CPA protecting the government. Also, if a juristic entity is a tenant and is over the threshold of 2 million rand in asset value or turnover the CPA won’t apply; so any company, trust, closed corporation, body corporate or partnership which has assets of 2 million rand or over or runs a business with a turnover of 2 million rand or more has no CPA protection,” he explains further.

These entities cannot use the CPA to exit a lease, etc.

‘Ordinary course of business’

However, says Shevelew, there is one further situation wherein the CPA is not applicable to a lease; this stems from the definition of “transaction” in the Act.

He continues that a transaction is, (among other things which are not decisive in the enquiry of whether a lease falls under the CPA), defined as being in the ordinary course of business. Unfortunately, “ordinary course of business” is not defined in the CPA, but “business” is. The definition of “business” provides some clarity; it is defined as the continual marketing of goods and services.

The position seems to be, therefore, that a lease will be in the ordinary course of business if it is not a once-off transaction. It also does not have to be in the ordinary course of the lessor’s business, but if it is the type of transaction that one would expect business people to enter into, then it will satisfy the requirement that it is “in the ordinary course of business”.

Applying the above to the questions asked above, Shevelew says it appears that even if a landlord argues that leasing a property doesn’t fall under their ordinary course of business, the lease will most likely fall under the CPA.

“The landlord would have to accept the tenant’s cancellation, as section 14(2)(b) of the CPA states that despite any provision of the consumer agreement to the contrary, a tenant may cancel a lease on 20 business days’ notice to the landlord.

“As the cancellation is lawful, the landlord will in all likelihood not be able to compel the agent to find a new tenant free of charge, or to compel the tenant to do so at all,” he explains.

In conclusion, Shevelew says the difference in the landlord’s position when the CPA finds application compared to when it doesn’t is significant, and therefore it is advisable for any landlord to make sure that he/she carefully scrutinises the applicable legislation, or ideally obtain legal advice prior to entering into or cancelling a lease. This will in the long run no doubt save on legal costs and time.

Showing 13 comments
  • Erica
    Reply

    I don’t have a lease with the landlord and I am moving but nothing was even discussed regarding this when we moved in. We still waiting for a lease, so I found another place and want to leave over the weekend. What do I do?

    • Reitumetse
      Reply

      How does a person view a room during the month of October that will be vacated on the 1st of December this whole process has no professionalism and it’s contradiction to the contract..by doing so it means there’s no respect for tenants and the contract.

      What should I do?

  • Sasha-lee
    Reply

    I want to cancel my lease agreement but I have to give two month notice(stated in lease agreement). Does that still apply in times like this and should I still pay for the month of May and June, if I give notice today? The CPA talks about 20 days notice, how does that apply to my situation?

  • Jacqueline
    Reply

    Hi there, I signed a lease for one year three years ago, I extended thereafter for two years.
    However last year we didn’t sign a lease extension. I gave my landlord one month heads up that I’m moving out now he wants to tie me to the lease agreement from nearly four years ago and states I have to pay even if I leave now end of August I will be liable for rent until end of Nov.

    Is this correct?

  • Anonymous
    Reply

    Hi I recently cancelled my lease due to the place having faulty electricity (I lived here for only 2 months).
    I am now being charged 3 months rent, agent’s commission for 12 months, advertising cost for new tenant, levies for 12 months. Is this legal?

    • Attila
      Reply

      I would also like clarity on this as I am in the same position. When is this scenario legal?

  • Marinetha
    Reply

    Good day, I have a tenant that needs to move urgently, she is on a month to month rental from a few months back, the other agent is now insisting on the tenant to give 2 full month’s cancellation of lease, please note, it is now a month to month agreement, what is the rule to the month to month? 20 days, or may the tenant give a shorter notice? Your urgent attention to this matter would be appreciated. Regards, Marinetha

  • Marius Cronje
    Reply

    Hi,
    My lease contract states that water forms part of my monthly rental thus I do not have to pay for water consumption. I do have a five year lease agreement with the landlord which in this case is a company.
    We now have received a notice that water meters will be installed and that water is for the tenants account.
    The company claim that they are within their rights to change terms and conditions as per Consumer Act. This I dispute because a contact is a legally binding document and terms and conditions can only change with the consent of both parties.
    My understanding is that the rental amount have made provision for average water usage .
    Please advise whether I am right or wrong in my thinking.
    Kind Regards
    Marius

  • Sandy
    Reply

    The tenants cancelled the lease and gave the required 20 days notice but now refused to vacate the premises. What the rights of the landlord.

    • braimoh Attorneys
      Reply

      Serve them with letter of demand for rent and for them to vacate before you apply for eviction

  • Athi
    Reply

    Hi

    I would like to know something when it comes to fines.

    A spot fine means that you are issued with the fine at that very moment ?

    Does the landlord have legal grounds to sign a fine on behalf of the tenant? and later on charge the fine on his rental amount? shouldn’t the tenant acknowledge the fine before its charged on your monthly rental?

  • Norma
    Reply

    Hi
    I would like to cancel my lease because I just lost my job I won’t be able to afford this rental price.

    I have been here for two months now my lease is supposed to be for a year.

    Am I wrong for cancelling, do I loose my deposit if I do?
    Please help

  • Thomas
    Reply

    I am staying in a retirement village where I rent a unit. I asked very uncomfortable questions on how the place is managed. The chairperson wrote me a letter to say I mingle in the management affairs and gave me 30 days to leave the village. I have a month to month lease agreement. I think it is unfair and not reasonable because I asked valid questions.

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