Nobody knows the trouble landlords have seen, nobody but Hollard Insurance, this is. And in its wisdom, Hollard is lightening the landlords’ burden with a new policy to protect them against defaulting tenants.
An estimated 1,2-million landlords in South Africa will be cheered to know that R35 a month plus 1% of the rent can now buy them peace of mind.
It’s been a downward slide for landlords ever since the Russians abolished serfdom in 1891. Back then, they could simply chop off the heads of uncooperative tenants and the offender would never default again.
But the tenant lobby put an end to landlord power in the 19th century, destroying the image of this noble class. “Property is theft” was but one of the hateful cries designed to undermine landlords in the public eye.
Cruel words dashed off in the depths of the British library further eroded their position. “The landlords, like all other men, love to reap where they never sowed,” Marx famously wrote. Easy enough to say when you’ve never tried to extract your livelihood from an unwilling tenant.
In theory, owning property is supposed to be a surefire get-rich-eventually scheme. In practice, tenants don’t always cough up the cash at the end of the month. So, what do you do when you’re too squeamish to break kneecaps and your tenants shower in the neighbour’s sprinklers when you turn off the water?
Many landlords use the funds they earn from renting property to cover bonds and provide pensions. If the tenant quits paying, they risk losing their house or monthly income.
The boys in the backroom at Hollard worked out that property owners themselves manage 50% to 75% of leased properties and that a significant number of properties have been bought to let.
Before 2002, landlords could sleep secure in the knowledge that the contract signed between them and the potential transgressor was law. If rents were not paid, the penalties they agreed to would come into play and, after a certain date, former lessees could sleep under a blanket of stars for all the landlords cared.
In 2002, a groundbreaking ruling by the Supreme Court of Appeal complicated the eviction process to protect the homeless.
This well-intentioned judgement made the bureaucracy of eviction the bane of every wronged landlord. To remove the now parasitic person from his or her property, a landlord has to get an eviction order and hire a lawyer. After the eviction, a separate civil recovery process is necessary to recover the defaulted rent.
But that was then and this is now. What was money to the lawyers is now money to the insurers, thanks to the new Landlord Protection Policy, which Hollard is introducing in partnership with Tenrisk Underwriting Managers.
When the golden goose tenant refuses to lay, Hollard and Tenrisk step in. The policy commits the insurers to forking out up to R40Â 000 in legal costs, taking care of the legal transactions and paying up to three months’ rent during an eviction and one month’s rent if the tenant does a runner.
With the Landlord Protection Policy in place, your tenant had better retrieve their cheque from the post office, take the dog to the vet or wait for the call from your insurers, because their problem is no longer yours.