Did you assess your tenant when they signed the lease?
Renters of private property are starting to show financial stress when it comes to paying their rent on time. Since the beginning of 2017, property companies and rental agents have found that more tenants could not pay on time than usual. In 2014, payment of rents was doing well, with 85.95% of tenants up to date with their rentals. But three years later, this has dwindled to 82.77% which shows a 3% decline in up-to-date rental payments.
Assess your potential tenant before tenancy
What has emerged is that proprietors or landowners need to make sure they pick the right renters by assessing them first before signing them up for one or two-year leases. When the client starts the application for a property to rent, the property owner can then screen the potential tenant to see if they are reliable and have enough money in the bank to manage payments.
The potential tenant or renter should first fill in a detailed form that includes a copy if his ID or passport. Then he needs to vouch that his bank balance is stable with 3 to 6 months of bank statements as proof. A salary slip is also surety for financial stability. The landlord should ensure the future tenant is not in debt. Getting references from previous landlords is vital for the future landlord to be able to assess this future tenant.
Patience in a lengthy procedure
By screening a potential client in this way, the landlord will avoid issues later on with late payments or lack of rental payments altogether. Those who want to rent a decent abode also need to be patient when they apply to rent as the application process will take longer than expected while the landlord makes all the relevant checks. Never leave your application to rent for the last minute – if you have to move out of an old rental at a certain date, make sure you apply for a new rental well in advance of this due date.
A landlord or property owner should think logically – meet the future tenant face to face to find out what they are like. Often a meeting with someone enables the gut feeling to help you make that decision and if you feel really strange about potential tenants, then don’t sign them on.
Understand the Prevention of Illegal Eviction and Unlawful Occupation Act (PIE)
When the Prevention of Illegal Eviction (PIE) Act was first made into law in 1998, it made sure that both the rights of landowners and individuals were protected and could be mediated. Then, in 2016, the act was broadened – anyone who could not pay rent but who refused to leave the property became known as ‘unlawful occupiers’ and were protected under some clauses in the Act.
Landlords had a hard time getting tenants to leave their properties and ended up paying plenty of money for cases to go to the High Court to be heard. Now the act has been amended again to look again at some issues: landlords were not wanting to let out their properties in case tenants never left and they could never evict them. Then they would ask for huge deposits to ensure they would have extra money to sort out issues in case people did not leave or left and then the property had lost value due to lack of maintenance.
Urgent applications are granted where harm is eminent “to any person or property if the unlawful occupier is not forthwith evicted from the land,”, where “the likely hardship to the owner or any other affected person exceeds the likely hardship to the unlawful occupier,” and where no other effective remedy is available. http://www.forbeslaw.co.za/Prevention-of-Illegal-Eviction-Act.aspx
Making Sense of the Consumer Protection Act (CPA)
The South Africa Consumer Protection Act opens with this phrase:
To promote a fair, accessible and sustainable marketplace for consumer products
and services and for that purpose to establish national norms and standards
relating to consumer protection, to provide for improved standards of consumer
information, to prohibit certain unfair marketing and business practices, to
promote responsible consumer behaviour, to promote a consistent legislative and
enforcement framework relating to consumer transactions and agreements, to establish the National Consumer Commission …
This law was put in place to:
- promote and protect the economic interests of consumers;
- improve access to, and the quality of, information that is necessary so that
consumers are able to make informed choices according to their individual
wishes and needs;
- protect consumers from hazards to their well-being and safety;
- develop effective means of redress for consumers;
- promote and provide for consumer education, including education concerning
the social and economic effects of consumer choices;
- facilitate the freedom of consumers to associate and form groups to advocate
and promote their common interests; and
- promote consumer participation in decision-making processes concerning the
marketplace and the interests of consumers.
www.wipo.int/edocs/lexdocs/laws/en/za/za054en.pdf
Conclusion
Getting the right tenant takes time. Be patient and ensure that you do all your paperwork. It is best to asses or screen potential tenants before they sign any lease, even if you have to wait a month with an empty property, as property owner. Use this month to do maintenance and to find the right renter. Rather start off on the right foot with a good tenant then have to spend far too much money later to evict someone who refuses to leave your property – and who has not paid rent.
Screening a tenant does not ensure you get an honest client but at least you do make headway towards getting a reliable renter who pays monthly and keeps to the agreement in the lease.
5 tips to get your tenant to pay rent on time:
- Communicate clearly and concisely – rent is due on a particular date and if it does not get paid, there will be repercussions. When the lease is signed, make sure your renter signs and dates every page to show that they have read it and understood the content. You all get copies of this lease.
- If rent is late, make a point of meeting with the tenant to hear if there are any issues with payment and how they can make it up to you or how you can come to a mutual agreement for the following months. Suggest setting up a direct debit order so that no one misses a payment.
- State in the lease that there is a late payment fee for rent then stick to this. Hopefully this will solve problem and get your tenant to start a monthly debit order.
- Tenants who pay rent on time get better access to credit and are recognised by credit checking bureaus. Ensure you tell your tenant you will report non-payments to the credit bureau and they will strive to pay on time to make sure their credit score is untouched.
- Offer your renter a markdown in rent price if they pay on time. If you give them a small discount for paying regularly and on time, it may incentivise them to pay on time every month to save money.
Try these 5 steps before evicting a client as this is a lengthy and costly procedure.