RENTAL WATCH: THE Rental Housing Act 50 of 1999 (the act) states in section 5 (6) that a lease must include the following:
The names of the tenant and the landlord and their addresses in South Africa for purposes of formal communication.
A description of the dwelling which is the subject of the lease.
The amount of rental of the dwelling and reasonable escalation, if any to be paid in terms of the lease.
If rentals are not paid on a monthly basis, then the frequency of rental payments.
The amount of the deposit, if any.
The lease period, or if there is no lease period determined, the notice period requested for termination of the lease.
Obligations of the tenant and the landlord, which must not detract from the provisions of subsection (3) or the regulations relating to unfair practice.
The amount of the rental and any other charges payable in addition to the rental in respect of the property.
A rental escalation or increase must be reasonable and must be stated in the lease. The act also refers to exploitative rentals as being an unfair practice (13 (4) (c) (iii)), but fails to provide any guideline regarding what is “reasonable” or “exploitative” or how often an increase can be introduced.
The act gives the rental housing tribunals in each province the power to determine rentals that are just and equitable to parties by considering several factors (s 13 (5)):
The prevailing economic conditions of supply and demand.
The need for a realistic return on investment for investors in rental housing.
The incentives, mechanisms, norms and standards and other measures introduced by the minister in terms of the policy framework on rental housing referred to in section 2(3), which is being developed.
There has been an undersupply of rental stock for almost a century in South Africa. In fact, the undersupply resulting from the two world wars led to the rent legislation or rent control in most countries, which still applies in parts of Africa and the US.
South Africa abolished the Rent Control Act in 2002, with the introduction of the Rental Housing Act.
The prevailing economic conditions in themselves demand a “better deal” for struggling tenants, and the undersupply of rental housing makes it a necessity to protect the poor.
Given the act as it stands, parties must approach the provincial tribunals to resolve their disputes. The most challenging disputes are based on oral agreements. The act recognises both oral and written agreements (s 5 (1)), but then makes certain requirements non-negotiable that are deemed to be included in a written lease (s 5 (6)). This is one of several unintended consequences in the act and ought to be interpreted to include oral leases.
Strictly applied, a landlord cannot increase rentals unless there is an agreement at the outset of what the amount or percentage of increase is and when this would come into effect.
The same would apply to any other charges to be paid by the tenant, that must be agreed to when concluding the terms of the lease.
It would be wise to record the terms of an oral lease, to prevent disputes or provide grounds in support of a rental increase. In the instance where the landlord during the lease period decides to increase the rentals due to an increase in the levy, the tenant is not obliged to pay such an increase, unless there was a prior agreement.
The tenant cannot refuse an increase if he/she agreed that any increase in the landlord’s sectional titles levy or other specific expenses such as municipal costs relating to rates, sewage and refuse would be passed on to to her.
The tribunal would be duty bound to uphold the landlord’s legitimate claim should the tenant lodge a complaint. How it factors in supply and demand and divides it by the landlord’s realistic return and the tenant’s economic status is another matter.
What would happen if a landlord decided to increase the rental before a lease came to an end?
Say for instance the rental for a three-year period was fixed and there was no clause allowing for any escalation or increase. The landlord or his/her agent omitted an escalation clause in the lease agreement, but then served a notice of the increase on the tenant.
If the tenant refused to pay the increased rental, the landlord would have no legal grounds to demand the increase or cancel the lease.
Dr Sayed Iqbal Mohamed is chairperson of the Organisation of Civic Rights, and deputy chairperson of the KZN Rental Housing Tribunal. He writes in his personal capacity. For advice call Pretty Gumede or Loshni Naidoo on 0313046451; or email: [email protected] or [email protected].
Daily News