The A - Z of being a Landlord

CREDIT CHECKS

ALWAYS check the credibility of your potential tenant through the credit bureau.  (rather a good tenant at a lower rental than a bad tenant at a higher rental).  Your Agent is acting on your mandate and therefore you are entitled to have sight of the application and all supporting documents, with the applicant’s consent.

EMPLOYMENT

Check that your prospective tenant has regular employment, where that is, and how long he has been working there. Also check what position he holds.

CURRENT ADDRESS AND REFERENCES

Check the lessee’s current address and possibly obtain a reference.

 

Credit checks to be done on ALL the adults who will live on the property

Couples can deliberately keep one of their records clean, and have the credit check done on that party.  Then the other party will sign the lease.

If you lease your property to more than one person, it is best to contract all the parties and specify that they are all jointly and severally liable in respect of the lease agreement. In the event of dispute, you can take action against each individual.

If your tenant is a company or a close corporation, it is a good idea to bind all members/directors as surety in terms of the lease agreement. In the event of a dispute you can take action against the entity and its representatives.

DEPOSIT

Make sure the full deposit is paid and cleared into your account before the keys are handed over.

This will cover many unforeseen costs incurred during the lease period, like arrear payments, repairing damages to the property or replacing lost keys.

INTEREST BEARING ACCOUNT

The landlord, the agent or an attorney must hold this deposit either in an interest-bearing account or a Trust Account, and the tenant must sign an Authority to Invest form instructing that their deposit be invested on their behalf so that they receive the interest gained thereon upon termination of the lease. 

DEFECTS LIST

Make sure you are aware of the defects on your property. On commencement of the lease, your property should be jointly inspected and a list of any defects or damages should be attached to the lease agreement; make sure both of you sign the list.  Photos and videos are essential.

PETS

Make sure that all agreements regarding pets are fully understood and adhered to from day one. 

Don’t let your guard down:  If the lease states one pet and the tenant arrives with more, it is difficult to move the animal out once it has moved in.

 

TENANT BEHAVIOUR

Whilst it is impossible to predict whether or not a tenant is going to misbehave, a comprehensive tenant screening will definitely minimize the risk.

Ensure that your tenant understands and accepts the behavior you expect from him.

It is also important for the landlord to ensure that the tenant understands the rules of any complex, as ultimately he is responsible for the behavior of his tenants.  Once again, it goes back to correctly choosing the right tenants.  Accepted behavior should be clearly spelled out in the lease agreement, along with any complex rules that should also be signed by the Lessee.

DUE DAY FOR RENT

The rental agreement should clearly indicate the day that the rent is due, and how it is to be paid.  The safest means of this control is through a debit order.The landlord has to provide the tenant with a written receipt for all payments received. It must contain the date, address of the rented property, the amount paid, what it was for i.e. deposit, arrears, rent, etc. as well as the period for which the payment is made.  This ongoing record is essential in the event that things go wrong and you need legal assistance.

 

WHEN A LANDLORD CAN KEEP A SECURITY DEPOSIT

Any broken fittings, tiles, cupboards, windows, appliances, doors, locks, blinds, countertops or bathroom fittings.

Excess filth (mould, marks on walls, clogged drains, garden refuse etc.)

Unpaid rent and utilities.

The Landlord should do a check on the house immediately upon receipt of notice of the tenant’s intention to cancel the lease, or a month before the lease expires so that he can bring any concerns to the attention of the tenants before they leave.  Photos and videos are essential. If course, the exercise should be repeated once the tenants leave so that the Landlord is aware of any deductions (if any) should be taken off the deposit refund.

REGULAR INSPECTIONS

Just remember, surprise visits are illegal.  Be reasonable.  Generally, every 3 months is advised, which allows you to identify potential issues and deal with them before they become big problems.

KEEP YOUR PROPERTY WELL MAINTAINED

Remember that a well maintained rental property normally attracts the right type of tenant. Poorly maintained properties may attract some who would overlook these ‘problems’, and may also be ‘not too worried’ to make rental payments timeously.

Insurance Cover to Protect Landlords

Certain Long-term Assurance Companies are providing insurance cover for landlords who want to safeguard themselves in terms of rental income losses and legal costs due to defaulting or absconding tenants. The insurance policy will cover a certain amount of the legal costs as well as a number of months rent to assist the landlord financially during the eviction process. 

For more information, speak to your Licensed Financial Services Provider or your Insurance Broker.

 

BREACH OF CONTRACT

A tenant cannot end a fixed term lease early without being held responsible for costs related to reletting the property, unless the landlord/agent agrees not to claim these costs.  Make sure any agreement not to claim costs is in writing.

If a tenant moves out of the property before the end of a fixed term agreement, they are breaking the lease and the landlord can claim costs for:

• Loss of rent until the property is re-let, advertising, reletting – fee charged to the landlord by an agent.
• (These costs can be claimed even if the tenant leaves after a breach notice for rent arrears is served).

RATES, TAXES AND HOME LOAN

The Landlord remains responsible for the Rates and Taxes (and any mortgage bond) on the property at all times.

EVICTIONS

It is not advisable to take the law into your own hands if a tenant does not pay the rent. 

Click Here for the Correct Procedure!...else it could land up very ugly!