Renting or letting a property doesn’t have to be a trying experience, writes Wally Lambert
You’d think we’d be sufficiently warned by the countless horror movies showing innocent-looking tenants turning nasty or happy landlords becoming heartless to think carefully when entering into a lease or rental agreement.
But, whether landlord or tenant, the whole rental process usually carries with it a pile of emotional territorial baggage. This often means that detached common sense is in short supply when it comes down to the final rental agreement.
If you’re a landlord wanting to avoid a Jekyll and Hyde tenant, it might be worth considering paying an estate agent to undertake the job for you, regardless of the size of the property you want to let.
Most rental agents offer a choice between a pure tenant selection service – which eliminates any responsibility on the part of the landlord to advertise and select potential tenants – or an administration service.
The latter is a more extensive service which includes collecting rent, dealing with problems on the property and undertaking any face-to-face dealings with the tenant.
In both cases, most legal fees associated with the drawing up of a rental contract are eliminated and become the responsibility of the agent.
A Mail & Guardian poll in Cape Town showed that most agents charge about 5%, plus value added tax (VAT), on the total rental contract for finding and screening a tenant. Property administration costs the owner about 10% of the rental amount, plus VAT, charged on a monthly basis.
Seeff agent Lana Smith claims most estate agents do not make money out of the rental services they provide, as the fee covers most of the legal costs associated with drawing up the rental agreement.
“We provide the service only in the hope that when the landlord decides to sell his or her property, he does it through us, or in the case of the person renting the property, that he or she looks to buy through the agency.”
However, for those potential landlords bent on avoiding rental agents altogether, it would be wise to follow a few guidelines.
The first – and this applies equally to prospective tenants seeking to avoid interfering landlords – is to ensure that any agreement is put in writing and legalised.
This is effected through the payment of revenue stamps. Without the necessary stamps, which differ between contracts, the rental agreement is not legal.
The stamps can be purchased at most post offices and from some legal firms.
While the relationship between tenant and landlord might start off on a good footing, it doesn’t take much for things to turn sour.
In the case of disagreements between the parties, a rental agreement may be the only form of legal recourse.
Smith says the best person to draw up such an agreement, if a rental agent is excluded from the arrangement, is an attorney.
Some pro forma rental contracts can be purchased at stationary outlets.
These should be studied carefully before either party signs, and must, again, have the relevant revenue stamps attached if they are to be considered legally binding.
Another factor to take into consideration when letting or renting a property without the help of an agent is what kind of rental to charge or pay.
Smith says these are generally market related. The “properties for rent” section of a local newspaper gives a good indication of what could be expected.
Seeff uses a general calculation, which involves measuring the property’s annual return and then dividing this by 12 to calculate a monthly rental.
For example, a R500 000 home in Cape Town, based in an area yielding an annual 8% return, would have as a starting point a monthly rental charge of about R3 333.
But it’s likely you could be paying significantly more, for example if the property offered extraordinary accommodation or additional security.
Most rental agreements are negotiable, however. Some landlords will accept a lower rent in exchange for longer leases or reputable tenants, which can make an out- of-your-reach property affordable.
A third guideline for both landlord and tenant in agreeing on a rental contract is to set out clearly the terms and conditions of the rental deposit.
Because this can be a fairly sizeable figure – often two months’ rent is requested in advance – it is advisable to negotiate about where the deposit will be kept.
If you’re a tenant, it’s perfectly acceptable to request that the deposit be housed in a trust account attracting a sound return, with you receiving the interest that accrues over the period of the contract.
Again, make sure this is written into the contract.
A detailed list of what is wrong with the property – don’t forget to list the chips in the bathroom and the state of the garden, if there is one – should also be documented as part of the rental agreement.
After a year or two it is not uncommon for a landlord to forget the original state of the property, and such a list may just save the unwitting tenant from having to forfeit the deposit.
As a prospective tenant it might also be wise to check who will be responsible for the payment of water and electricity bills before you take occupation.
Also keep an eye on the telephone bill and other special features, like satellite television or gardening services. Wars over these are far more common than one may think, particularly when new tenants move in.
Rates can be another contentious issue. Some landlords may agree to pay the rates, but then expect tenants to shoulder any future increase, while others may simply make the tenants liable for them from the beginning.
ENDS