A Guide for Tenants: The Importance of the Lease Agreement
Category Renters Guide
Did you know that a lease agreement is the only contract that does not have to be in writing? While this is the case, we strongly suggest that all lease agreements be in writing to protect the interests of all parties involved, tenant and landlord.
The rental market in South Africa is currently very active, with the Western Cape being the province with the lowest vacancy rate, according to TPN. Finding a rental property that ticks all the boxes, and is also affordable, is not always an easy feat in the current rental market. So, when you do find and apply for a property, it is important to enter into an agreement where you understand all the T's & C's, as well as know your rights, as a tenant.
Signing a legally binding contract is not to be taken lightly. In this article, we discuss the importance of the lease agreement, what the agreement should include, and understanding the terms therein, as well as:
- Navigating the Rental Market
- Factors to Consider Before Signing
- Deposits & Interest Rates
- Inspections are a Must
- Knowing Your Rights
- Understanding Your Responsibilities
- Renting Etiquette
- Terminating Your Lease Agreement
1. Navigating the Rental Market
The easiest way to find a property that meets all of your requirements is to put alerts on all necessary platforms, such as Property24, Private Property, and even agency websites, such as Louw & Coetzee Properties.
When receiving an alert for a property you are interested in, it is essential that you make contact with the landlord / agent immediately. Providing your contact details in a message is a good start, however giving them a call to request the application form is even better. Ensure that you communicate the precise property you are interested in, providing the location, rental price and include a description of one of the photos. This is especially helpful with a rental agent, as they are likely to have a few properties on their books; therefore, it is important to clarify which proeprty you are interested in.
Upon receiving the application form, send in as much information as possible, such as your ID, proof of address, payslips, and any other info the agent requires to do a credit check and FICA. This will speed up the process as the agent does not have to go back and forth, asking for additional documents.
Quick Tip: The agent / landlord requires the tenant's permission to do a credit check.
2. Factors to Consider Before Signing
Once being accepted as the successful applicant, it is important to read through the contract and discuss the details with the landlord, or agent acting on behalf of the agent.
Factors to consider are:
- Rental terms, such as the duration of the lease, which is generally 12-months for residential properties.
- Payment terms, such as the rental amount, amount of the deposit, the payment schedule, any other fees required, or penalties outlined in the agreement.
- Maintenance & repairs, for instance, what maintenance is the responsibility of the landlord, and what is for the tenant's account.
- Any rules & restrictions, such as if pets are allowed, if you may hang pictures on the wall, or if the complex or estate has additional rules for noise, parking, etc.
- Conflict resolution, which is generally easier if there is a rental agent to mediate, however the form of communication when addressing concerns or conflicts should be clear, as well as establishing a time period in which to resolve such issues is advised.
- Lease renewal & termination, this should be clear as to when the contract will need to be renewed, as well as the notice-period for terminating the agreement.
3. Deposits & Interest Rates
By law, the landlord / agent is required to invest your deposit in an interest earning account at a rate that is equivalent to a standard savings account.
Our Head of Rentals, Angie Passman, says that she finds many tenants ask for higher interest rates and request that the landlord or agent move their money into an account with higher interest rates. Passman's response is, "We are mandated to keep the deposit safe and pay interest at the prescribed level in terms of the Rental Housing Act." And that is exactly what our team does.
Quick Tip: Always confirm the banking details you have received before paying the deposit. This should be done telephonically with the responsible person, be it the agent, landlord, or rental admin team, as is the case at Louw & Coetzee Properties.
4. Inspections are a Must
Inspections benefit all parties involved, tenant and landlord. In terms of the Rental Housing Act, ingoing and outgoing inspections are legally required, and they will form part of the lease agreement.
At Louw & Coetzee, we outsource our inspections to a company called Inspector P. This ensures that the inspection is unbiased. The professional inspector will do a thorough walk-through of the home, create a list of any scuffs, scratches, broken tiles, appliances that aren't working, and so on. Each identified defect will have a date and time stamped photo to support it.
When doing both the ingoing and outgoing inspection, it is important for the tenant to also join for the walkthrough and note anything that might be overlooked. This will help you on the day you move out and your deposit needs to be paid back.
Quick Tip: It is the tenant's right to request and receive a copy of the defects list made by the inspector, as well as receive all the photos as supporting proof.
5. Knowing Your Rights
As a tenant, there will be certain rights you are entitled to, such as the right to a property that is in a safe and liveable condition. You have the right to privacy, whereby the landlord or agent cannot intrude without consent, except in certain circumstances, such as emergencies. You also have the right to maintenance and repairs in order for the property to remain habitable, however this does not include repairs caused by negligence by the tenant.
Furthermore, you have a right to a written lease agreement, which should outline all terms and conditions of the tenancy.
Louw & Coetzee Properties can assist in drafting a lease agreement if there isn't one. As a real estate agency, we do not only assist in rental management, but we also provide the service of drafting a lease agreement for a property if there is no agent involved.
Knowing your rights also includes abiding by the rules and restrictions outlined within the agreement, and estate or complex rules and regulations. The rules are there for the safety and enjoyment of all homeowners, landlords, and tenants.
Quick Tip: Something that not all tenants know is that the tenant has a right to give 20-business days' notice to terminate the lease.
6. Understanding Your Responsibilities
Of course, being a tenant comes with a certain handful of responsibilities, such as paying your rent timeously, taking care of the property you are renting, and even effectively communicating with the landlord or agent should the need arise, like reporting a maintenance issue. There is also the responsibility to not exceed the occupancy limit of your rental property. Lastly, there is the responsibility to take care of any damages caused to the property, beyond normal wear and tear, such as pulling a handle off the cupboard, or a broken window caused by throwing a ball.
7. Renting Etiquette
If you follow the rules and take responsibility for the tasks that are required of you, you are already in the standing for being a good tenant.
Let's take it a step further. When renting, a good rule to follow is to look after the property better than you would take care of your own property. Being a good steward of what has been given to you trickles down to taking care of the proeprty, paying your rent on time, as well as effectively and respectfully communicating with the landlord / agent.
Quick Tip: Renting etiquette is especially important when managing disputes. The landlord is more likely to be favourable toward the tenant if they have displayed characteristics of a responsible tenant.
8. Terminating Your Lease Agreement
Finally, the hot topic of terminating your lease early brings us back to the tenant's right to give 20 business-days' notice when terminating your lease before the lease period is over, for instance at the half-way mark out of a 12-month full-term lease.
However, the tenant should be very clear of any penalties that may arise when terminating your lease early. A cancellation penalty may be requested, which can be an amount of 2-month's rent, however this must be a term included in the lease agreement. It is imperative that you are aware of what the cancellation penalty entails.
Immediately upon cancellation, the agent or landlord has an obligation to place the property back on the market at the same rental amount to place another tenant as soon as possible.
If there are any disputes that cannot be handled between the tenant and landlord, the last resort is to send a query to the Rental Housing Tribunal, a decision-making body with the main function of dealing with disputes between landlords and tenants.
Quick Tip: Do not default on the rental payments or pay late. The Rental Housing Tribunal is much less likely to consider the tenant's request if the tenants' payments are not in order.
It may be clear by now that a lease agreement is an essential step in the rental process. Furthermore, knowing and understanding all of the terms stipulated in the agreement is what provides tenants with clear instructions and expectations for their rental period.
Renting a residential property can sometimes be a challenging experience. Therefore, with the above knowledge provided, including knowing your rights and responsibilities, tenants can better navigate the rental market, and their relationship with the landlord, ensuring a positive and fulfilling tenancy.
If you require any further assistance, please contact our Head of Rentals, Angie Passman:
082 793 3151 | angiep@louwcoetzee.co.za
Written by: Hayley Kellerman
Author: Louw & Coetzee Properties