Four challenges faced by investment landlords

Private Property South Africa
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Landlords are often seen as villains who ask for exorbitant deposit fees which they are reluctant to give back, and who press their tenants mercilessly for rent money every month. The truth is, however, that landlords can often feel themselves the victim. Here are the four top challenges faced by landlords:

1) Inspection and inventory

When there is damage to the dwelling, there are a few technicalities that need to have been followed in order to find out who should pay:

  • The Rental Housing Act refers to a joint inspection of the dwelling by the tenant and the landlord before the new tenant takes occupation, and within three days before the previous tenant moves out.

  • The joint inspection is proof of the landlord’s duty to carry out the repairs needed or put right any damage.

  • When vacating, the tenant’s deposit is not withheld for defects or damage that the landlord was required to repair.

  • The landlord can hold the tenant responsible for any defect or damage caused by the tenant, as well as the tenant’s visitors or household members.

2) Obtaining the deposit

The landlord is allowed to take a deposit from the tenant, which must be paid before the tenant takes occupation. There are three steps that a landlord must follow when receiving a deposit:

  • Give the tenant a receipt containing the date; stating the amount of the deposit; the tenant’s name, address of the dwelling for which the deposit is paid, and the type of dwelling (flat, room, garage, cottage, etc); and the landlord’s signature

  • Invest the deposit with a bank in an interest-bearing account. It could be any type of account (current account, savings etc.) but the interest rate must not be less than the rate offered by the savings account of the same bank or financial institution.

  • Provide the tenant with written proof of accrued interest when the tenant makes a request.

3) Refunding the deposit

The deposit is refunded at the end of the lease period. However, the following conditions apply:

  • When no amount is owed to the landlord – in other words if there are no arrears, no damage to the dwelling or repairs required by the tenant – the deposit must be refunded with accrued interest within seven days after the tenant has moved out.

  • When an amount is owed to the landlord, the deposit must be refunded after deducting any amount for which the tenant was responsible, within 14 days after the tenant has moved out of the dwelling.

  • When the tenant refuses to inspect the dwelling with the landlord within three days before the lease period ends, the deposit need only be refunded within 21 days after the tenant has moved out of the dwelling.

The landlord has a total of 21 days from the time the tenant has moved out or he has become aware that the dwelling was abandoned by the tenant, to inspect the dwelling, carry out repairs and deduct the cost of repairs, arrear rental and cost of lost keys and to refund any money available.

4) Dealing with agents

The landlord may instruct an agent, for example, a letting agent or an attorney, to collect the deposit. At the end of the lease period, the landlord is responsible for the refund to the tenant even if the agent did not hand over the amount to the landlord. The landlord is also ultimately responsible to the tenant even if the lease is signed through his or her agent.

For example, let’s look at a situation where a dispute between the agent and the landlord resulted in the landlord cancelling the agent’s mandate to act on his behalf. The agent decides not to transfer the deposit to the landlord (and may have legal grounds to do this). However, this conflict does not affect the tenant’s claim to a refund of the deposit, since the landlord is directly responsible. The refund of deposit is perhaps the most contentious aspect of conflicts involving the tenant, landlord and agent.

For more information about the rights and duties of landlords, tenants and agents, consider taking the University of Cape Town Residential Letting short course, which starts on 28 October, 2013. The course is presented part-time and entirely online throughout South Africa. For more information contact Taryn on 021 447 7565 or on taryn@getsmarter.co.za.

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