How Alert Level 4 impacts landlords and tenants

How Alert Level 4 impacts landlords and tenants

MAIN IMAGE: Samuel Seeff, chairman of Seeff Property Group; Cilna Steyn, managing director of property law firm SSLR

Moving from lockdown into Alert Level 4 did bring relief for some but brought little change to the rental market as tenants are still unable to move out of their current rental premises and estate agents may not do physical inspections. One change is that courts may grant eviction orders but it may only be executed after Alert Level 4 ends (unless otherwise decided by the courts*).

“The rental market has been hit with a double whammy in the form of the Covid-19 lockdown and the deteriorating economic climate,” says Samuel Seeff, chairman of Seeff Property Group. Many tenants are faced with reduced income and many will suffer the inevitable consequence of job losses. Preliminary information from TPN indicates that almost 16% of tenants did not pay their full rent in April and a further 16% did not pay any rent at all, and TPN expects this to deteriorate further as the lockdown progresses.

Read more: A third of SA tenants haven’t paid their full rent this month – and May could look much worse

Many landlords are dependent upon rental income and are now obliged to make arrangements with banks or financial lending institutions for relief on mortgage payments and with their local municipalities regarding levy payments.

Unfortunately phasing out of the complete lockdown into Alert Level 4 won’t bring much relief to the rental market sector.

Where does Alert Level 4 leave landlords and tenants?

While moving into Alert Level 4 brought relief for some with for instance more people able to return to work, it has brought little change to the residential rental market. “Both tenants and landlords will remain in a holding pattern until such time as the regulatory restrictions are lifted to such an extent that movement can take place,” says Seeff.

Tenants may not move: During Alert Level 4 people are still only allowed to leave their home if it is for work purposes when they fall under essential services (which now includes more business sectors); need medical care or supplies; are going shopping for any items on the broadened approved list of goods that may be sold; exercise within the set restrictions. People are also allowed to return to their home to be close to their work if before lockdown they found themselves elsewhere in the country.

However, people can’t take occupation of their new properties and tenants are still not allowed to move to other accommodation says Cilna Steyn, managing director of property law firm SSLR.

What about people that signed lease agreements to take occupation on 1 April? Steyn explains that this would still not be allowed as the regulations clearly state ‘return’ to a previously occupied place of residence. However, persons classified as essential services under Alert Level  will be able to move into temporary accommodation, as allowed for in the regulations, to be close to their place of work.

Will estate agents be able to do inspections? “Estate agents will not be able to do physical inspections because they are not allowed to function under Alert Level 4,” says Steyn. However, inspection and maintenance software platforms are available that make it possible for agents to continue performing this important function without physically visiting the tenant’s premises.

Courts may grant evictions – what does that mean? During lockdown there was a complete moratorium on all evictions. That has now changed. According to the new regulations for Level 4 a competent court may grant an eviction order: “in terms of the provisions of the Extension of Security of Tenure Act 62 of 1997 and the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998: Provided that any order of eviction shall be stayed and suspended until the last day Alert Level 4”. Steyn says this means that a landlord may apply for an eviction order from the court but it may only be executed after Alert Level 4 is lifted.

“It is very important that landlords start that process now and not wait till Alert Level 4 is lifted,” says Steyn. She explains: “Because there will be a major influx of cases to our courts once we can function again, meaning that our court rolls will be extremely congested which will lead to a delay in the time period to obtain eviction orders. Starting as soon as possible with the eviction process will allow an owner to obtain the order, which could mean that as soon as the regulations allow, they can execute the eviction order and then place a new paying tenant as soon as possible. To only commence proceedings in Alert Level 3 will lead to an even more severe loss of income.”

For more on how lockdown level 4 restrictions affect tenants and landlords watch this discussion between SSLR’s Rowan Terry and Cilna Steyn with Bruno Simao of Bruno Simao Attorneys.

Holiday rentals: Due to the decline in tourism, an influx of holiday rental stock is also expected. Property owners may need to consider storage of furniture if they do not want to suffer financial losses.

University rentals: The Consumer Protection Act (CPA) allows for cancellation of leases giving 20 business days’ notice and the landlord will then be entitled to a fair penalty. The challenge of course is that the landlord cannot fill the space for as long as there is a restriction on movement. As with residential rentals, landlords need to be accommodating and there will need to be a level of give and take here too.

For now ‘there should be give and take’

Currently thousands of people are still unable to return to work because of the regulatory restrictions during Alert Level 4. This is a nightmare situation both for tenants who are without financial means to pay their rent and for their landlords who have to forgo the rental income. “Each landlord/tenant situation is unique and must be approached as such with a solution for their particular challenges. There should be give and take where needed,” advises Seeff.

He says landlords will need to negotiate with tenants in the event that the tenant is finding it difficult to pay their rent. “Keep in mind it may be difficult to replace the tenant at the same rent or at all in the aftermath of the lockdown. Tenants who can, should continue to pay. Those who find themselves in difficult financial conditions should liaise with their agent or landlord,” he says.

Also read: Answers to lockdown rental questions

Seeff’s advice to landlords and tenants is to make use of the various relief programmes available, if it is at all possible for them to qualify for any form of assistance. Landlords, who are dependent on the rental payments to cover municipal rates and taxes, can approach their local municipality for relief.

Various municipalities have announced some form of relief. In the Cape the City of Cape Town, Stellenbosch, Overstrand and Mossel Bay municipalities are all offering some form of payment relief to property owners whose accounts fall into arrears due to loss of income from the coronavirus crisis.

What can landlords and tenants expect post-lockdown?

Rental agents should expect a great deal of movement post-lockdown. Many tenants will need to find more affordable accommodation or move in with family or friends if they lost their jobs or had to take a pay cut. Rental rates are expected to be under pressure.

Landlords should expect that rental rates will come under pressure even if there is a higher demand for rental accommodation because tenants simply cannot pay more. Rental stock will increase after the lockdown as many sellers, especially developers, look to withdraw their properties from the sales market until conditions improve.

(*This was added after the article was published. Editor.)

Showing 24 comments
  • Retha Bos
    Reply

    Can a tenant get a permit from the police to move into a new SS unit on 1.5.2020? Putting the Body Corporate under pressure to accept this and allow them to move in?

  • Annette Saunders
    Reply

    Hi, varsities seem not to open up this year. We still pay rent for hostels and flats. What is a fair way to cancel and will there be a penalty?

    • Courtney
      Reply

      With people now having a window to move, can my landlord (property owner) come and do inspection and return my deposit? I moved out early (the day before lockdown) and I would like to finalize my dealings with him.

  • Vaughn
    Reply

    The simple answer is NO. And I have personally confirmed this with Brigader Lemba, Station Commissioner at Germiston Police Station, the Police may only issue a permit to attend a Funeral. There has however been an increase in tenants trying to submit FORM B Declaration of citizen’s movement in exceptional cases.. under point no. 8 and “writing in moving out of property” which is in contravention of point 16. ” MOVEMENT OF PERSONS regulation Gazette No. 11098 dated 29th April 2020 16. (1) Every person is confined to his or her place of residence. etc

    • Jacky
      Reply

      I have small business of selling second hand furniture, it started operating almost 2months before lockdown. Due to obvious reasons am closed till further info from govt, my landlord is refusing payment arrangements he does not even want to discuss a discount although I never made any income from the business am operating in his garage so I asked him after lockdown has been lifted in my sector of business I can only then be able to slowly pay him but his refusing saying I must move.
      His demanding rent for May although he decided to take my deposit to cover for April rent meaning I owe him for current month only . Is he able to get eviction order.?

  • Cecile
    Reply

    Hi im going to do this short..
    So we had to move in 1 April but due to lockdown we couldn’t. Deposit is payed. Told the landlord that we please want our deposit back as we don’t know how long this will still be going on and we can’t move. But now have to stay in one room at my parents because of no house anymore. My question actually, can she keep our deposit even if we are not living in the house?

    • Charity
      Reply

      I’m currently renting by X Properties. My husband and I have been hit by this current situation negatively, we can’t pay for our rental and the Agent X is not helping at all. They want their rental. They are not even negotiating at all. I mean we have stayed there for a decade, never ever had any problems with paying.
      What must we do?

  • Kim
    Reply

    My lease ends 30 june 2020. If I am still unable to move due to lockdown rules and not by choice, at this time, can the owner/landlord increase my rent for the extended period?

  • Yvette Botha
    Reply

    My neighbour is unable to pay her rent for May. She received a letter from our landlord saying that she has to vacate the premises and hand her keys in on 1 June 2020. I myself am unable to pay my full rent for May. I have been advised that whatever I short pay for May will have to be paid over and above my rent that is due for June at the end of May. I am unable to do this as I do not know when we will be able to return to work. Please we are in a huge panic and myself and my neighbour have children to feed. Please assist urgently

    • Lebogang
      Reply

      I’m in the same boat. I think they cannot evict you. It is against regulations. Only a court can do that

  • Melissa
    Reply

    Hi there. I just want to know, can my landlords evict me as I have been retrenched on 9 April 2020,and have not been able to pay rent. I didn’t sign any lease forms or anything for that matter. They have been threatening me everyday to move out. Need advice please.

    • Helene Meissenheimer
      Reply

      Hi Melissa, it will be best that you try to negotiate some kind of agreement with your landlord. Legally you are obliged to pay rent but under the current regulations you may not be evicted during Alert Level 4 although your landlord may apply for an eviction order which may only come into effect after the last day of Alert Level 4.

  • Carina
    Reply

    My tenant was due to move out of my property by the end of May. At this stage we do not know if this will be possible. Will she still be legally obliged to pay the full rent? She is with her daughter for the duration of lockdown

  • ISMAIL MOOSA
    Reply

    I gave my tenant notice in Feb 2020 already that I will not be renewing his lease after the lease expires on 31 May 2020. He hasn’t paid me rental and levies (water, electricity etc) ever since. Before the lockdown he locked up and to date he hasn’t contacted me. He has the keys to my property and I don’t know if he’s going to return. His belongings are still on my property. What can/should I do??

  • Helen Rourke
    Reply

    Please can you provide clarity on whether use of the common property is allowed between 6am and 9am as per the exercise regulations? Assuming of course physical distancing and the use of masks. Asking as we have en enclosed garden shared by 11 people and urgently needing clarity on whether my son – the only child in the building would be allowed on his swing?

  • Sabelo
    Reply

    I have been affected by the lockdown and been unable to meet my rental obligations. I liaised with the estate agent but they went on to cut off all prepaid municipal services (water and electricity) How then do I deal with this kind of situation ?

  • Angie
    Reply

    Good day,
    We paid a deposit on a rental but due to lockdown, we cannot move. Are we allowed to ask our deposit back?

  • Barbara
    Reply

    Good afternoon

    My tenant gave notice on the 30th of March, he is now able to move before the 7th of June. With the lockdown we were unable to get new tenants. If I can get the house rented before the 7th of June, will my tenant be able to move in?

  • Linda GOVENDER
    Reply

    My existing lease ends at the end of May, I don’t want to renew but want to move my furniture into storage. Can I do this?

  • Donovan
    Reply

    After eviction. Will the tenant be liable to pay access amount?

  • Builddailys
    Reply

    Maintenance can only occur in emergencies or with tenant approval. This might include plumbers, electricians and tradespeople can work on, and inside rental properties. We recommend landlords arrange for professional services to clean or undertake maintenance of their vacant rental property.

  • Reinette van der Zwan
    Reply

    My tenants who has been bad tenants from the moment they moved in were given a letter by my attorney to move 3 Feb if they do not pay the rent for January before 27 January. The contract was cancelled. They refused to move. The bond comes off my salary automatically. Now I must pay for the levies, electricity that they use or the Body Corporate sues me. They have changed the remote code, because I have my own gate. They have put a lock on the gate that connects me with the rest of the complex. They are criminals, but they are protected by lockdown. I as owner cannot get a payment holiday, because you must have proof that you do not earn a salary. Who is there to help me as widow. I want to move in there, but now have to pay to live somewhere els. Where is my rights as tax payer and law abiding citizen?

  • Samantha Morgan
    Reply

    Your comment or response I meant would be highly appreciated

  • Sheila Tanner
    Reply

    Can landlord increase my rent during lockdown ?

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