The tough economy is putting both landlords and tenants under strain. Could using a good rental agent help?
Any dip in the economy will put a strain on consumers and it's become very evident that many South Africans are feeling the bite of the downturn. The exchange rate is up and down like a yoyo and this has a significant impact on prices of petrol, food and other day to day essentials.
People need a roof over their heads regardless of the economy and logically rent should be regarded as the most important expense they are faced with. Unfortunately, many tenants assume they can string a landlord along by delaying payment, or sometimes by not paying the rent at all.
Landlords face the same challenges as tenants: they are also paying more to live and still have expenses and commitments to meet, often relying on the rent to help cover those costs. Broadly speaking, the law is on the tenant’s side and although it can be accomplished, evicting a delinquent tenant is both a lengthy and a costly exercise.
Some tenants are going to default on rent regardless of the economy. ‘Bad’ tenants tend to make a habit of not paying and will simply drift from property to property. You would think that it would easy to recognise this trait and steer well clear, but unfortunately these people are often charming and convincing, winning over landlord after landlord as they continue to rent property for which they have no intention of paying.
Those who rent privately (without using a rental agent) often target these landlords, mainly because they know property owners don't generally conduct as thorough a background check as a rental agent would.
On the other hand, tenants can also open themselves up to numerous problems when renting directly from a landlord, because in many cases landlords have little or no understanding of the law surrounding the leasing of property.
Social media is peppered with stories of problematic landlords. The most common issues seem to be the landlord entering the property without the tenant’s permission/knowledge and the landlord insisting the tenant is liable for the rent for the entire lease period because of an early cancellation. Deposits are another thorny issue and although there are of course always two sides to any story, it’s often claimed that the landlord is illegally holding on to the deposit.
Grant Gavin from RE/MAX Panache says: “On the face of it, a rental seems like a fairly simple, straightforward transaction, and it should be, provided all the checks, balances, agreements and procedures are in place. Sadly, if handled poorly, a rental transaction does have the potential to open up all sorts of problems for both landlords and tenants should one of the parties default.”
There are many benefits to having a reputable agent manage the affairs of a rental property. Not only do they have the necessary experience when it comes to lease agreements, they are fully aware of both landlords’ and tenants’ rights and will have solid systems in place to do background checks on tenants.
“The main advantage of employing a rental agent is to be able to make full use of their systems, procedures and agreements, and to have their professional advice available when necessary. Under a managed lease the agent also acts as the middleman in the collection of rent and would be the one to chase the tenant for any money outstanding.
“It's also beneficial for the tenant to work through a rental agency. An experienced agent understands the law surrounding rentals and will advise the landlord of his obligations regarding the maintenance of the property as well as the return of the deposit should a dispute arise.”
Unfortunately, there is only so much a rental agent can do and things can go wrong regardless of the calibre of tenant. Life happens. People lose their jobs, sink into debt or simply have cash flow problems. A rental agent isn't a fortune teller and can't foresee what may happen, but what they can do is ensure your tenant has a clean credit record, do background checks to establish that he doesn’t have a history of habitually defaulting on rental payments and that he earns enough to afford the rent.
How to find a good rental agent
There can also be problems if you use an unscrupulous or inexperienced rental agent. Anyone who deals in property - and that includes rentals - has to be registered with the Estate Agency Affairs Board (EAAB) and be in possession of a valid (current) Fidelity Fund certificate.
Word of mouth is often the best form of advertising. Ask friends and family for recommendations and if you are still unsure, ask if the agency would be willing to provide referrals from satisfied landlords.
While using a rental agency may cost a little more in the form of commission, having checks and balances in place as well as having a correctly worded lease agreement could end up saving you thousands in the long run.