Is rental housing sector ready for new Act?

Is rental housing sector ready for new Act?

MAIN IMAGE: Simon Dippenaar, director of Simon Dippenaar & Associates; DHS Minister Lindiwe Sisulu

South Africa’s rental housing scene will see major change once the Rental Housing Amendment Act 35 of 2014 is gazetted into law, notably with more obligations on landlords and more rights for tenants.

In April this year the Department of Human Settlements (DHS) launched a countrywide series of public participation engagements about the regulations developed to give effect to the commencement of the long-anticipated Rental Housing Act, 1999 as amended. This followed DHS Minister Lindiwe Sisulu publishing the draft regulations to the Act for public comment in the previous month. With the public participation process still ongoing, Cape Town attorney Simon Dippenaar explains what will be required from both landlords and tenants within six months of the Amendment Act coming into effect.

Criminal liability for non-compliance

The Rental Housing Act 50 of 1999 governs the relationship between landlord and tenant. However, practical and statutory weaknesses have made it difficult to enforce. Enter the Rental Housing Amendment Act 35 of 2014. The Amendment Act increases the rights of tenants and obligations of landlords and firms up the rules regarding inspections, deposits, the condition of a property and what should be included in the lease.

Landlords especially need to be aware that non-compliance with the Amendment Act could result in a fine or the possibility of spending up to two years in prison. While this threat of criminal liability for non-compliance has sparked concern, the legal certainty the Amendment Act provides should improve landlord/tenant relationships. The clarity and security of well-defined lease agreements could also stimulate foreign investment with its concomitant spin-offs.

Also read: Rental Housing Amendment Act increases risk of non-compliance for landlords

The Amendment Act in a nutshell

  • The new legislation requires landlords to provide tenants with a written lease agreement. Verbal agreements will no longer be binding. ‘Get it in writing’ has always been sage advice. It still is.
  • Properties must be ‘habitable’. This is defined as a dwelling that is structurally sound and suitable for living in, has adequate space, and provides protection from the elements and access to basic services such as water and electricity.
  • Property owners are also entitled to ensure that their property is treated with respect and the Act protects landlords from tenants who cause malicious damage to a rental property.
  • The landlord must replace the tenant’s deposit in an interest-bearing account and repay the deposit plus interest within seven days of the lease expiring.
  • The onus is on the landlord to inspect the property with the tenant at the start of the lease. Any defects or damage not rectified by the landlord must be listed and attached to the lease agreement. If a joint inspection does not take place, the property is assumed to be in good condition and the landlord may not later withhold the deposit for repairs or damages.
  • The landlord cannot cut off utilities and services due to non-payment. Only the municipality has the right to do so.
  • A landlord cannot lock a tenant out of the property without a court order. This rule gives the tenant security of tenure and makes sure that the landlord follows procedure if there is a grievance.
  • Tenants are entitled to privacy and, while landlords can inspect the property from time to time, unannounced ‘spot’ inspections are not permissible. Sufficient advance notice is required.

What about existing lease agreements?

When it is finally gazetted, the Rental Housing Amendment Act will apply immediately to new lease agreements and landlords will have six months to bring existing agreements in line with the new legislation. What is not clear is how non-compliance will be enforced and whether, for example, a verbal agreement becomes null and void. And if so, from what point in time?

The bottom line

The Rental housing Amendment Act 35 of 2014 attempts to remedy shortcomings of the Rental Housing Act 50 of 1999, improve landlord/tenant relationships and provide better protection for tenants.

Historically some landlords have exploited desperate tenants by renting out sub-standard properties. The Amendment Act spells out standards for rental housing – a significant step towards improving the quality of housing accessible to the most vulnerable in our society.

Although the landlords’ obligations are more onerous under the Amendment Act, the legislation protects the landlord’s property interests as well and going forward tenants will have to comply with certain revised terms and conditions in their lease agreements. This will weed out the ‘good’ tenants from the ‘bad’.

Get compliant now

The Amendment Act makes it a criminal offence to not have a written lease agreement. So, if your landlords don’t have a written agreement in place, now is the time for them to draft one. Six months sounds long but as you know, time flies.

Editor’s note: This article originally featured in The Real Estate Investor Magazine April 2019.

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