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Reduce rental risk with right agent and lease

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Another reader who owns several rental properties has approached the Property Poser panel about the responsibilities of her rental agent towards her and her tenants.  The reader explains that she uses an agent to oversee and manage the contractual and practical arrangements surrounding her leased properties.

She feels that the agent is neglectful in carrying out his duties as he generally fails to carry out routine inspections of the properties and conducts no background checks on the tenants he places.

With the amount of legislation in place that affects the legal position between landlord and tenant, the reader is concerned that she will need a more vigilant agent and better lease agreement to minimise her exposure to risk, expenses and damages.

The reader would like to know what aspects a landlord should give particular attention to when it comes to lease agreements and the like, so that the experience of letting property may be as problem-free as possible.

According to Schalk van der Merwe from Rawson Properties in Somerset West, Cape Town, a useful starting point would be to obtain the history of the prospective tenant.

“This would include the applicant’s rental, employment and credit history, which could be used to form an impression of the nature of the tenant.”

It may also be useful for the landlord or rental agent to go so far as to make one or more calls to the provided rental and personal references of the prospective tenant, says Van der Merwe.

“This type of check will serve to provide the landlord with additional, supporting information about the tenant’s propensity for a certain type of behaviour.”

Van der Merwe says this type of check could be conducted for all or just the most favourable of the applicants so as to make an informed decision in choosing the successful candidate.

“It must be considered, however, that the Rental Housing Act prevents unfair discrimination against any prospective tenant based on race, culture, religion and the like.”

One should therefore be careful in considering the nature of the questions asked of the applicant and his or her references, says Van der Merwe.

“You don’t want to be unjustly accused of refusing the rental based on an arbitrary factor.”

While doing a thorough check on the prospective tenant’s history can greatly assist in the assessment, future life events that may impact negatively cannot necessarily be predicted, says Van der Merwe.

The Rental Housing Act makes provision for certain aspects that must be addressed in a lease agreement, says Grant Hill of Miller Bosman Le Roux Attorneys in Somerset West.

“Additional provisions that address more specific concerns should also be set out in the lease, as long as they aren’t in conflict with any law.”

Hill says a landlord is entitled to require that a deposit be paid.

“The deposit is generally applied at the termination of the lease for any damages caused by the tenant to the property.”

The amount is usually determined according to the monthly rental but it can be a different amount if the landlord and tenant agree, says Hill.

“An increased deposit could provide the landlord with a greater degree of security should the tenant have caused major damages, breached the lease by failing to pay the monthly rental or vacated the property within the stipulated period.”

Hill says it is important to remember that legislation such as the Rental Housing Act and the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act will apply regardless of the provisions included in the agreement.

To ask a property related question, visit www.propertyposer.co.za.

Written by Grant Hill and Schalk van der Merwe You are reading Reduce rental risk with right agent and lease articles

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