Many tenants are starting to query the amounts they are being forced to pay to rental agents when signing a new lease. In one particular instance, the tenant had to fork out R975 for a lease fee as well as R150 for a credit check. These fees seem to be on the high side, particularly when you consider that tenants also have to put down a deposit for the utilities (this ranges from R1 100 to R2 500 in the Durban area) as well as pay a full month’s deposit (although some agents insist on two months’ rental as a deposit) on the property.
In other words a tenant could be asked to pay R18 000 for the deposit and first month’s rent. This coupled with the other charges could mean that the amount that has to be paid before a tenant is given the front door key, for a property costing approximately R6 000 a month, is going to be around the R20 000 mark.
While the lease fee forms a minor part of the overall expense, a little research shows that the charges do vary significantly from agency to agency.
For instance a well-known Durban North-based agency charges R550 for the lease fee – credit checks are included in this amount. A franchised agency in Johannesburg does things a little differently and charges R750 for a lease agreement for a property valued under R5000 and R1 140 for anything above that amount. A Cape Town-based agency on the other hand charges R400 for an application fee and R400 for the lease agreement. It’s worth noting, however, that the application fee is generally refunded if the applicant is not successful.
While there is no law as to how much a rental agency or landlord can charge for a lease agreement, section 5(3)(p) of the Rental Housing Act stipulates “any costs in relation to contract of lease shall only be payable by the tenant upon proof of factual expenditure by the landlord.”
A valid question
The question that needs to be asked is why there is such a discrepancy between the various agencies and could tenants be taking the higher fees into consideration before deciding to rent a home? This is a difficult one to answer as landlords may argue that the tenant is obviously unsuitable if he is quibbling about such a small amount. However, given the enormous monetary outlay required by tenants, you may find that suitable tenants, who can easily afford the property, balking at the higher rental agency charges and choosing to deal with an agency that offers more affordable rates.
One has to wonder if landlords are even aware of the charges incurred for setting up a lease – after all, they simple want a tenant who pays his rent on time, in full, every month, and are not going to be particularly concerned about a tenant’s initial financial outlay. Rental property is at a premium at the moment and houses and flats are generally snapped up. However, those who are struggling to get their properties rented out should perhaps consider the impact that the lease fee may be having on potential tenants.