Just Property Group Midstream

26/08/2014

LANDLORDS - DO YOU KNOW HOW TO DEAL WITH NON-PAYING TENANTS?

Do you know whether your lease agreement complies with the Consumer Protection Act or the Rental Housing Act?
Do you know what procedures you have to follow if a tenant is in default with the payment of his monthly rent?
Do you know the requirements set out in the Prevention of Illegal Eviction from Unlawful Occupation of Land Act?

The first thing to remember is that the Consumer Protection Act overrides any time period that may be contained in the lease agreement with regard to breach clause and the rectification of the breach. In terms of the Act the landlord is required by the Act to give at least 20 business days notice to the tenant to rectify the breach before the agreement in cancelled, provided that the tenant does not remedy the breach within the given time frame. If the landlord did not give the 20 business day notice, as required, his notice and the subsequent cancellation of the lease may be defective.

Secondly, if the tenant has failed to make the necessary payments, the landlord has to decide whether he is going to institute legal action in the Magistrate's Court or the High Court. I will recommend that you initiate legal proceedings in the Magistrate's Court, provided that the outstanding rental amounts is less than R100 000-00.

Once the landlord has given proper and due notice, the landlord must then decide whether he is going to proceed to issue summons with an automatic rent interdict or whether he is proceeding with an application for eviction or both.

A landlord may, in some instances, be able to recover the outstanding rental and legal fees with a summons. If a tenant fails to pay his rent after receipt of the summons, the landlord will have a clear right to cancel the lease agreement.

A landlord will want to institute an application for the eviction of the tenant. The landlord must again comply with the provisions of the PIE Act in respect of the time periods and the procedures to be followed.

It is important to commence with these proceedings as soon as possible after the notice to rectify the breach. Remember that a tenant only becomes an unlawful occupier after the lease agreement was cancelled. If more than 6 months have lapsed after the cancellation of the lease agreement, the landlord will be required to comply with an additional set of requirements.

Landlords ought to take notice of the fact that the eviction process can take between 8 - 10 weeks, if unopposed. If opposed, you can easily add another 6 weeks or so to that.

Remember, the PIE Act is not there to discriminate against the landlord, but rather at the prevention of illegal evictions. In order to succeed with an application for eviction, the landlord had to, in all material respects, comply with the provisions of the relevant acts.

26/08/2014

21/08/2014

I want to congratulate the whole Just Property Group Midstream team (agents and admin) for their hard work and diligence. In 6 months we have managed to sign 50 rental deals. Good work boys and girls. Let us do the next 50 in less than 6 months hehehehe

15/08/2014

15/08/2014

15/08/2014

15/08/2014

14/08/2014

WHY INVEST IN RESIDENTIAL PROPERTY?

Some people buy property to live in. Others are motivated by the investment opportunity presented by residential property.

Buying for rental income is a relatively low-risk strategy. The goal is to earn an ever-increasing rental income as well as benefit from an increase in the capital value of the property over time.

When purchasing a property, you have the choice of buying it cash or to finance a part of the purchase price with a bond. Whether your investment property is initially cash flow-positive (where the rental income is more than the bond repayments and additional costs such as rates) or cash flow-negative will largely depend on how much of the purchase price you paid in cash and how large the bond is. Clearly, if you made a large cash contribution then the bond would be small, your bond repayments will be low, and your property would more likely be cash flow-positive.

Also take into consideration the fact that your monthly rental will increase between 5% and 10% every 12 months. In the first year you may earn for example R10 000 per month, but with a 10% escalation clause in your lease agreement, you monthly rental will increase to R11 000 in the second year, R12 100 per month in the third year, R13 310 per month in the fourth year and in the fifth year you can earn R14 641 per month.

Although it is ideal to be in a cash flow-positive position from the start, this isn’t always possible and you may need to “top up” the rental income to match the bond repayments and other monthly expenses. Hopefully, in time, the top-ups will be exceeded by the increase in the capital value of the property.

The idea is that you should take a long-term view and try to keep the property until the bond is paid off (at which time most of the rent will be pure profit) or even never sell at all. This means that the property you choose to buy should be in an area where you expect people to still want to live (and rent) in future. This is also important because, if you ever do need to sell, you want to know that there will be potential buyers around.

Once your investment is cash flow-positive you can consider investing in another property, and in this way gradually build up your property portfolio and grow your wealth.

Midstream Estate is the perfect area for such an investment. Should you consider buying a property as an investment, contact any of our sales agents, and we will gladly advise you on the current properties for sale, and of the potential rental income you may earn if renting out this property.

14/08/2014

UNMARRIED COUPLES LIVING TOGETHER

The effect on rental agreements

A rental agreement in respect of a residential property, unlike the sale of a residential property, needs not be in writing in order to be legal and binding. It is, however, recommended that a lease agreement always be reduced to writing, and that said agreement be signed by all the parties.

In South Africa cohabitation has become very acceptable in society. Cohabitation entails 2 persons living together as husband and wife in a permanent life partnership. It very seldom happens that the parties to such a relationship enter into an agreement which governs and regulates the relationship between the parties and which also deals with the effects of a dissolution of the relationship between the parties.

For one or other reason, unknown to me, there exists a perception that when a couple who lives together as husband and wife for a period exceeding 6 months, that a legally and binding relationship comes into existence, and that in the event of the relationship being dissolved for whatsoever reason, that the parties have an automatic claim against the other party, and that such a claim will include a right to reside in the property being occupied by the parties and/or even a right to maintenance.

The true position in South African law is that no legal rights and obligations attach to such a relationship, and that these rights and obligations have to be negotiated between the parties.

This now brings us to the scenario where A (boyfriend) and B (girlfriend) lives together as husband and wife. They are deeply in love and decide to move in together. They look for a suitable property to rent, and find the perfect property. A enters into the lease agreement with C (the landlord) for a 24 month lease period. A pays the deposit and the first month’s rent. For the next 6 months A pays the due rent on time. Then out of the blue A informs B in the 7th month that the relationship is not going to work, that they must separate and he is going to leave. A indeed moves out of the property, and then fails to pay the rent for the following month.

What are the implications for the landlord?

It must the remembered that the contracting parties, at the time of the conclusion of the lease agreement, were the landlord and A. Remember that B never signed the lease agreement.

The first implication is that B becomes an unlawful occupier of the property the moment that A vacates the property because she is not a party to the lease agreement.

In this instance the landlord will have to issue a written notice that B vacates the property within a certain period of time. Should B refuse to vacate the property after receipt of said notice, the landlord will have no other option than to proceed with an application for the eviction of B. Possibly the landlord might have a claim for compensation against B for the use of the property. I will not deal with the eviction process in this article.

The landlord will not be entitled to claim cancellation of the lease agreement and/or damages resulting from a breach of contract against B.

The landlord will, however, be able to entitled with legal action against A, which entails the cancellation of the agreement and a claim for damages.

What should the landlord do prevent the above situation?

I recommend that the lease agreement be concluded in the name of both the parties and that the agreement be signed by both the parties. A surety clause can always be brought into the lease agreement in terms whereof A and B undertakes to be liable for the rent, separately from each other or together.

Our lease agreement already makes provision for this kind of scenario, and our agents are taught that both parties must sign the agreement.

Should you require more information or have any feedback regarding any issue raised in this article, you are welcome to contact our Manie Havenga by sending an e-mail to [email protected]