How to choose the right tenant for your rental property

Private Property South Africa
Private Property Reporter

Selecting the right tenant is the most crucial step when deciding to rent out your property. Consider these helpful tips on how to choose the right tenant.

When it comes to finding the right tenant to place in your investment property, there are a few key principles to take into account to ensure a mutually beneficial arrangement for both you and your tenant.

South African legislation can make your search for the right tenant a rather complex process, according to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

However, there are several methods that landlords can use to ensure they choose the right tenant and are protected from the risk of delinquent tenants.

Stipulating the terms and conditions:

“The initial step that landlords should take before they advertise the rental property is determining the conditions of the rental agreement. Landlords should be specific about what they want with regards to the conditions within the agreement, dealing with issues such as pets and whether or not the tenant is a smoker. It is essential for the landlords to stipulate in their advertisement that each tenant will be vetted before any rental agreement is entered into” says Goslett.

Stipulating the terms and conditions of your rental property upfront, will help to narrow down the number of inquiries on the property to only those who meet your criteria, says Goslett.

Asking potential tenants to fill out a detailed application form can also help in narrowing down your selection.

The application form should comprise tenant’s personal information like employment details, as well as any contactable references they may have. The application form should also request supporting documents like a copy of their identity document and a salary slip to verify their employment and affordability, advises Goslett.

The vetting process:

Once you have received the application forms with the attached supporting documents, it is advisable to proceed with a credit check, a criminal record check and to contact any of the references provided by the tenant for verification.

Drawing up the agreement:

“Once the vetting process has been complete and a suitable tenant has been selected, it is imperative that a comprehensive and legally-sound lease agreement is drawn up, which stipulates all necessary conditions in detail” says Goslett.

It is important for the lease agreement to be as detailed as possible in order to avoid any confusion or uncertainty regarding the required obligations for each party.

It’s essential for the terms and conditions on the agreement to be agreed upon and signed by both parties.

The agreement should also include a pre-occupation inspection report that should be completed in the tenant’s presence. Details regarding aspects such as the deposit, rental amount, maintenance and upkeep should also be included in the agreement.

“Time frames should be allocated to the required clauses as well as penalties, should any condition be breached,” advises Goslett.

What is the landlord’s responsibility?

Goslett says that even though a lease agreement has been signed, the property still remains the landlord’s responsibility.

If a utility bill is not paid during the period of tenancy, the landlord will ultimately be required to settle the outstanding balance.

It is essential for landlords to be aware of what is happening with their rental property and ensure that all payments are up-to-date.

He adds that certain measures can be taken to minimise the risk posed by a defaulting tenant, such as prepaid electricity and water meters, for example. If this is not an option, a deposit for these accounts can be agreed upon beforehand.

The importance of home inspections:

Although landlords should always remain respectful of their tenant’s right to privacy, it is advisable that home inspections are conducted on a regular basis. The home inspection must be conducted at the tenant’s convenience and any issues that are a breach to the agreement should be dealt with as soon as possible.

“If problems are left, they will cost a lot more to rectify further down the line. For example, if a late or non-payment is not addressed immediately, within a short space of time the tenant could be a few months behind and incurring further utility costs. Aside from the escalating costs, legal action may need to be taken in order to get the tenant removed from the property, which will also be a costly and time-consuming exercise,” says Goslett.

Professional rental management agents:

If you are willing to part ways with a percentage of your rental income, then hiring a professional rental agent is a good option for landlords who don’t have the time to manage their rental portfolio. Appointing a reputable rental management agent with the necessary expertise and resources can help ensure that your rental property is managed in the correct manner.

“A professional management agent will assist the landlord with tenant selection, reference and credit checks along with the day-to-day management of the property. They will also be up-to-date with the latest legal and regulatory developments to protect landlords and tenants. Rental agents will have procedures and systems in place to professionally avoid any potential problems and deal with any disputes that may arise. If necessary, they will also have access to the legal resources and experience to deal with any situation efficiently,” says Goslett.

Many unnecessary and unpleasant situations can be avoided if the correct steps are taken when placing your home on the rental market. Taking the right measures from day one can be the difference between a landlord in trouble and one whose buy-to-let portfolio is producing a regular income and growing in capital value, concludes Goslett.

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