Collecting rental timeously is one of the most frustrating tasks that busy property managers and landlords have to undertake on a monthly basis.
“Crying over spilt milk is not an option and certainly isn’t going to pay the rent…Finding a good solid citizen, who will take their obligations seriously, is an absolute must in today’s rental market.”
There are many South African landlords who have good relationships with their tenants. Unfortunately, there are also a large number who do not. Renting out property should be a win-win situation for all. The homeowner pays off his bond and the tenant has a roof over his head that he isn’t necessarily in a position to buy himself.
But…SA laws are making it increasingly easy for defaulters to get away with defaulting on rent for longer periods of time, leaving landlords feeling powerless. The saying “a leopard does not change its spots” appears to be a fairly accurate analogy for erring tenants – some of whom appear to make a habit of moving from one debt-ridden household to the next. While some will always find a way of slipping through the cracks and continue to rip off unsuspecting landlords, there are ways for landlords to protect themselves long before these wrong-doers set foot over the threshold. Landlords should be extremely wary of any prospective tenant who cannot afford to pay the deposit. The dangers associated with someone who is literally not able to put his money where his mouth is cannot be over-emphasised. Regardless of any excuses, essentially if a tenant cannot afford to pay a deposit as well as the first month’s rent, he should be looking at a more affordable option.
Generally speaking, the first indications that something is amiss become evident fairly quickly. These include late rental on at least two occasions in any fixed rental period, an inability to pay the required deposit, non-rental payment, evasiveness or providing excuses for rental not being paid on time, among others.
Although every situation is different and there are often valid reasons for late payment offered by tenants. Landlords should view these excuses with caution, particularly if they occur more than once. When it becomes evident that the tenant cannot afford to pay rent, landlords need to act as quickly as possible, in order to keep their losses to a minimal. In the case where the landlord needs the rent to meet bond commitments the reaction is often far more dramatic than those who can afford to let things slide…for a short while.
Regardless of how urgent the matter is, landlords need to act quickly and decisively
Usually a phone call, email or letter will kick-start things… If not, a letter of demand is imperative.
Once it becomes apparent that the tenant is not in a position to pay the rent, landlords must send a letter of demand. A tenant can only be evicted if he is an unlawful occupier in terms of the PIE Act. A person can only be an unlawful occupier if they have lost their status as a tenant. That status is only lost if;
- a demand for payment has been delivered to the tenant,
- the tenant has not paid,
- and the tenant’s lease has been cancelled as result
It takes two to three months to lawfully evict a defaulting tenant when the matter is unopposed in court. However, the process does take longer if the tenant opposes the matter, this is because
- there are statutory time limits in the PIE Act which affords the tenant an opportunity to oppose proceedings,
- time for papers to be served on the unlawful occupier and the local municipality and
- of course the time period given by the presiding magistrate or judge for the tenant to find alternative accommodation upon the eviction order being granted.
As a Landlord, it is important that you emphasize to the Tenant that lateness with their rent and lapses will not be tolerated.
If payment is not made on the agreed-upon date, the Landlord must immediately send the tenant a written breach of contract letter
- giving 7 days to remedy the default. (This period is normally stipulated in the lease agreement)
- The breach of contract letter should also note the landlord’s intention to report the payment default to credit bureaux should the account not be settled within the specified period.
- This letter is normally sent by a registered debt collector.
Any further relaxation of payment terms of the lease must be agreed to writing.
In terms of the Consumer Protection Act, a landlord can cancel a fixed-term lease if a tenant has failed to rectify a material breach after being given at least 20 business days’ notice to remedy the breach.
If the breach is not rectified by day 21, you can send the tenant written notification of cancellation and instruct the tenant to vacate the property by a certain date.
It is important to remember that, once a lease has been cancelled, a tenant ceases to be a tenant and becomes an unlawful occupier if they remain in the property after the deadline given for vacating the property. In these circumstances, the ex-tenant becomes a squatter or unlawful occupier, and you will have to obtain an eviction order to get him or her out. The 20-day notice period prevents you from cancelling the lease until day 21, but it does not prevent you from taking steps to claim what is owed to you. After giving 20 business days’ notice, you can also load an adverse (default) listing against a tenant’s credit profile. (TPN)
There are also online services available, that can help manage a rental property if you are not using an agency. TPN credit bureau specializes in property rentals and is the largest credit bureau in Africa to specialize in vetting tenants for rental properties. Their dedication to this niche market has allowed them to create specialized systems helping make better decisions on which tenants to place, and assisting in collecting your rent each month.
Using TPN Payment Profile and notification services, requesting rent is quick and easy. The Landlord will notify the agent monthly when their Tenant has paid their rent and this will be recorded on the Tenant’s profile. The Tenant will also receive a notification to let them know, that their payment profile for that month has been updated. TPN will create a lease performance report. This report details the recorded payment history, total blacklistings, total demand letters and total recommendations, as well as a mini summary of actions taken against any of the tenants associated with the account. It is truly amazing how quickly all the excuses for late and non-payment disappear when tenants realize their credit profile is being affected. And rewarding a dream tenant with a good credit rating or even recording a positive listing, which is provided via the TPN system, is a great way to keep them in your property.