Lease Agreements generally follow a time-and-tested approach. Tenant likes the property; a Lease Agreement is signed; Tenant moves in; Tenant pays their rent each month. At the end of the fixed period, Tenant elects to either renew the lease, or continue on a month-to-month. Or terminate and move out. Most people are familiar with this approach. But what happens if renewal is not a choice given to the Tenant, but rather the subject of negotiation with the landlord?
I own a small property that I leased to a business just over two years ago. I sent a notice to the tenants informing them that I was terminating the lease and they would be required to move out. I actually thought I was being generous by giving them 60 days’ notice to leave. The tenants have come back to say that they’re not moving out because they’re exercising their right to renew. The agreement says that the lease will last for two years. It doesn’t say anything about any renewal. Is it true that the tenant has a right to renew?
After endless weekends searching for that perfect property, the tenant finally heaves a sigh of relief. Found it! And it’s perfect! The forms are signed, the deposit and first month’s deposit is paid, the removal van is booked. Let the settling in begin.
But have you ever wondered what the landlord is planning on doing with that deposit? Here’s the thing: the deposit doesn’t belong to the landlord. It is held by the landlord as a form of security, in case the tenant damages the property or fails to pay their rent or electricity. But unless or until such time as the tenant steps out of line, the landlord has no right to the money. This is generally not really thought about until the lease ends. Which is when the tenant starts clamouring for their money back. And this is when the landlord often scurries to find another tenant, so that they can use the new tenant’s deposit to pay back the old tenant’s deposit. Because the old tenant’s deposit was spent within days after it was paid over.
There’s a familiar struggle that plays out at the end of every lease. It revolves around the repayment of the deposit. Unsurprisingly, the tenant is keen on getting their deposit back pronto. But the landlord is invariably not so keen to part with the cash. The distrust on both sides is not entirely without justification.
There are many tenants who have been caught out by the games that landlords are wont to play with their deposit. On the final day of the lease the tenant dutifully removes the last moving box, sweeps the last dust particle, locks the door on the pristine property and returns the keys. Only to find themselves being held liable for paying a painter, carpet-cleaner, handyman, gardener, cleaner. For good measure the tenant may even find themselves paying for the carpets to be replaced and fixtures to be updated. All out of their hard-earned deposit.
Up until now there have been two ways of entering into a Lease of Property Agreement: verbally or in writing.
- Verbal lease agreements are recognised in South African common law. They are effectively month-to-month leases, and have been upheld as valid by our courts.
- Written lease agreements are, of course, the norm. It’s far more difficult to argue a he-said-she-said when everything he and she said is in writing!
Things are about to change, however, in form of the Rental Housing Amendment Act* 2014. Section 5 of this Act requires that all lease agreements are in writing – and the landlord bears the onus of ensuring that a written contract of lease is signed. If a landlord fails to get the agreement of lease in writing s/he would be committing an offence and subject to a fine or two year’s imprisonment, or both. Section 5 also sets out the minimum requirements for a valid Lease Agreement:
Let’s face it – within the modern economic climate, buying your own home is but a pipe-dream for many people. Between the cost of property, escalating interest rates, the bank’s reluctance to grant finance, job insecurity and, above all, the affordability problem, it’s no surprise that so many people rent their accommodation as opposed to buying their own. One of the biggest challenges facing tenants is the subject of the deposit. It is generally the norm for landlords to require the payment of a deposit before handing over the keys. The problem comes at the end of the lease, when the tenant moves out and waits for the deposit to be repaid. And waits. And waits. And waits.