Consumer Information

Author : Homeloans SA

Renting out your Property – The Do’s and Don’ts

Are you a short-term or long-term landlord with one or more properties to rent out? Renting out property either way could be a profitable business…when you know the rules and protect your property and yourself against unnecessary losses.

You will need to find the right tenants, control the security deposit and collect the monthly rent, lay down responsibilities between landlord and tenant referring to property maintenance and many other issues.

Here are some tips that could help you avoid the many pitfalls out there in the concrete jungle.

Is renting property in South Africa regulated?

Yes, the Rental Housing Act (Act 50 of 1999) lays down the stipulations to be followed by both landlord and tenant. Furthermore the Law of Contracts, Common Law and the Constitution also governs rental agreements.

Finding and screening the right tenant

You will be better off taking some time here and listing what you would want in a good tenant – a mental picture on a piece of paper of your perfect tenant. When you start interviewing possible tenants weigh them up against your criteria.

You can advertize your rental property – there are many options available. Don’t overlook your local church or letting your circle of family and friends know that you are looking for a tenant. Getting someone who has a firsthand referral is a great step in the right direction.

Screening could involve a number of processes such as confirming stable employment, checking with previous landlords, and doing a credit check.

Do I need a written rental contract drawn up?

In South African law a verbal agreement is fully binding but for obvious reasons it is in everyone’s interest to draw up a written lease agreement. Certain information is required in the agreement and to make sure everything is included you can use a standard lease agreement, available on many property websites, newsagents or from the Estate Agency Affairs Board.

Asking a deposit

Asking for a deposit equal to at least one month’s rent is recommended. This must be kept in an interest-bearing account according to law – the interest is for the tenant, not the landlord. The deposit plus interest must be paid back to the tenant at the end of the lease, after a final inspection of the property. If the tenant is in arrears at the time of vacating the property, and/or has caused damage to the property beyond normal wear and tear, you are entitled to use the deposit to make good the damage or to cover what is still owed to you in rent.

All about the rental amount

The monthly rental amount must be stipulated clearly in the contract, by what date it is payable as well as how and where it must be paid. In terms of the Rental Housing Act you must issue your tenant with a receipt for any rental amount paid; on the other hand – to show proof of payment is the tenant’s responsibility. Any increase in the rental should be included in the rental agreement.

The period of the lease and cancellation agreement

The period of the lease and how cancellation or notice can be given on both sides should also be clearly stipulated in the lease agreement. Should a tenant not pay the rent you have the right to sue the tenant and obtain a court order for eviction.

Other issues to cover in a lease agreement:

To avoid disputes and unhappiness between landlord and tenant include the following stipulations in your agreement:

1. Details regarding the keeping of pets
2. Changing the décor
3. Who is liable for paying for the municipal services
4. Who is liable for maintenance of the property – usually the landlord is liable for maintenance of the property outside and the tenant for the inside.

Inspection of the property

Inspect the property when a new tenant moves in and provide him with a copy of the inspection. During the rental period the landlord has the right to ask the tenant if he can inspect the property at a time convenient to the tenant. The tenant cannot deny reasonable access.

Tenants running a business from your home

Should this happen it could turn into a nightmare so clearly stipulate what can and cannot be done should a tenant work from home. You do not want your property turned into a car-repair workshop!

The handling of disputes

Every province has a Rental Housing Tribunal either a landlord or tenant can refer to in the case of unresolved disputes. The Tribunal’s powers are laid down by law and you can contact your local provincial government for details of your tribunal.

Making use of a managing agent

If you are renting out a flat on your residential property, for example, and you have the time, it makes sense that you should take care of the management yourself. If the property is not in close vicinity; or you own a number of rental properties; or you simply don’t have the time, you could make use of a managing agent. This is usually an estate agency that will find a tenant and manage the property for you in return for a managing fee.

Paying a management fee may be seen by some landlords as a grudge payment. But, if you have a number of properties, are very busy or are not close to your properties this could turn into money well spent. Make sure you choose your management agent wisely and you can enjoy the income from your property without the stress.

In times of economic turmoil such as recessions, more tenants are falling behind in paying their rent. A reliable rental agent will take care of these problems for you.