As a property investor, tenants are people who are crucial to the day to day running of your investment portfolio. Since tenant and landlord rights and responsibilities are often a source of frustration for all parties, how do you keep your relations with your tenants healthy and professional?
The best way to avoid any possible headaches for either party is to have a sound lease agreement in place. Simple as this may seem it is not all investors that understand the material content of a good lease agreement. The amendments that have been made to the National Credit, Consumer Protection and Rental housing Acts, which all affect property letting in one way or the other, have seen the evolution of the lease agreement into a complex document.
Although one cannot know the details of these voluminous acts off by heart, it is cognizant to know that there are several material details that are mandatory, as stipulated by the Rental housing act, to be included in any written lease agreement.
Firstly who are the landlord and the tenant ( lessor and lessee)? Their full names, identification numbers and physical addresses must be correctly stated in the lease agreement.
Secondly which property is being let? A full description of the premises to be rented is required, if the deeds office description is known, this can be used otherwise the street address will do. Next the rental amount and its escalation must be clearly stated as well as the frequency of rental payment. An example is to say, rent of R10 000 is due monthly, with an annual escalation of 5%. Any other charges over and above the rent, that are payable by the tenant must also be adequately detailed in the rental agreement.
Furthermore the lease period must be stipulated, if there is none then the notice period for termination of the lease must be clearly spelt out. Moreover the obligations or responsibilities of each contracting party also need to be highlighted.
Another big thing that is mandatory is to state the amount of deposit payable, if any. As this has been a nightmare for many it is important to be aware of the following issues pertaining to tenant deposits. It is the responsibility of the landlord to place the tenants deposit in an interest bearing account for the duration of the lease, if an agency is involved the agency must put the deposit in an interest bearing trust account. The interest accrued is for the tenant on the condition that an in going inspection of the premises was conducted in the presence of both tenant and landlord or his representative and such recorded. On vacation of the premises another inspection is conducted by the same. If there are any deductible repairs that need to be done deposit plus interest less deductible repairs is to be refunded if no repairs the full amount will be refunded. However if the tenant does not allow for the inspection they are at risk of losing the deposit as there is no record of the property’s state. Investors are also strongly cautioned against accepting deposit as the last month’s rental, if damages have been made to the property one is left with no recourse after having used the deposit as the last month’s rental, since outgoing inspections are only done upon vacation of the premises.
Finally one finds that the issue of maintenance has been a big bone of contention in tenant landlord relationships. As a rule of thumb, if it is structural it is for your expense as the property owner but whatever is consumable is generally for the tenant. An example is if there is an electrical short at the premises it is the landlord’s responsibility to attend to it but if the bulbs blow then surely those consumables are for the tenants pocket.