Who Pays The Rent?

Private Property South Africa
Lea Jacobs

Whether we like to admit it or not, as things stand, the law definitely appears to favour the tenant over the landlord. Tenants are becoming increasingly more aware of their rights and although there are many who enjoy long-term, mutually beneficial relationships with their landlords, there are also those who milk the situation for all it is worth.

A great deal has been written about what a landlord may and may not do to [bring an erring tenant back into line.. Changing the locks and disconnecting the electricity and/or water supply to the property are a no-no and the matter could well end up in a court of law if the landlord attempts these or any other illegal methods in an effort to remove a defaulting tenant. No one wants to have egg on their faces (and a hefty legal bill to boot) and landlords who try to take matters into their own hands could well end up facing the wrath of the law.

The problem is twofold. The landlord, who is not receiving an income from the rent, now has to dig deep into his rapidly emptying pockets in order to pay legal costs. The tenant in the meantime is sitting back and running up additional electricity and water costs, knowing full well that it takes time for the landlord to get his legal ducks in a row.

While the law does provide the means for a landlord to recoup the lost income and legal expenses, more often than not the tenant isn’t in any position to repay the outstanding money.

Many landlords are not in a financial position to carry the tenant and the situation could prove to be disastrous for those who use the rental income to pay off their bond. Experts have stated repeatedly that the buy-to-let market has yet to recover from the 2008/9 economic crisis, but given the rights South African tenants now enjoy, it may not be just the economy that is delaying growth in this sector.

Investing in property and building a strong property portfolio has always been regarded as one of the most effective ways of making money in the long-term. Today’s landlords however, have to be far more careful to whom they rent property. Many now insist on receiving two months’ rent up front in the form of a deposit to help offset costs should things go wrong. Credit and background checks are a must and regular checks on the property once the tenant has moved in are essential.

Of course not all tenants are bent on living in a property free of charge. Most have experienced cash flow problems at some stage or another and a tenant may simply pay the rent late or short pay the amount owed. While this may not be as serious as completely defaulting on payments, the effect on the landlord can be extremely serious.

Sadly, regardless of how many checks are conducted and irrespective of how hands-on the landlord is, some tenants still manage to fall between the cracks. While it may be expected and allowances even made, there are better solutions available. Rental guarantee products are aimed at alleviating the stresses and strains of renting out property and cover all eventualities should the landlord find himself in a difficult position.

No one can foretell what will happen in the future and playing it safe by ensuring that every eventuality is covered is going to make the responsibilities of being a landlord easier and perhaps more importantly, more profitable. There are always going to be risks involved, but choosing a service that offers peace of mind will go a long way towards ensuring that the landlord is never out of pocket.

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