Renting your Property, 7 Deadly sins

We are constantly informed of rental horror stories ranging from nightmare tenants, greedy landlords, lazy agents and countless other woes surrounding the rental industry.

As a Landlord, you want your investment protected, and as a Tenant, you want your deposit looked after and a comfortable place to live. To avoid the frustration of financial loss, stress and damage to your property, make sure you are not committing these seven deadly rental sins.

1. Inadequate screening of tenants

This is the number one deadly sin.  Poorly screened tenants are incredibly costly in the long run. Trustworthy rental agencies such as Harcourts will firstly do a proper credit check. This is worth every cent.  Never accept tenants on face value, as they are often desperate to find a home and may resort to saying or doing anything to get your trust.

• Complete a thorough credit screening with a recognised credit bureau.
• Verify their employment and income, covering at least three times the monthly rent.
• Keep a copy of their ID
• Contact at least the last two landlords or rental agents listed as references.

The handling of damage deposits is clearly outlined in the Rental Housing Act. The deposit remains the tenant's property and needs to be deposited into an interest bearing account.

2. Poorly structured lease agreement

A verbal lease is as close to a badly constructed lease or one that falls foul of the law and does not adequately detail the obligations and rights of both the Landlord and the Tenant. The lease must have legally acceptable clauses in line with current legislation and all parties' interests and rights clearly outlined. Don't be tempted to buy an over-the-counter lease at a stationery store.  Apart from the main elements of the lease being the parties, premises, rental amount and dates, there are several crucial elements that must also be included such as

• Which party is responsible for repairs and maintenance?
• Who must pay for the upkeep of the garden and servicing of the pool?
• Who must pay for the utilities and how will they be paid?
• House rules that the tenants must follow in a sectional title unit.
• How will the lease be renewed on the anniversary of the lease?

As a landlord or agent, you need to ensure that tenants understand the payment method and due date, as well as the consequences   of late payments.

3. Insufficient damage deposit

Another critical error is not being able to take sufficient damage deposits. Traditionally a month's rental was the norm, but with tenants under greater financial pressure and reneging on their last month's rent, a minimum of two month's deposit is the requirement today. The handling of damage deposits is clearly outlined in the Rental Housing Act. The deposit remains the tenant's property and needs to be deposited in an interest bearing account. The interest on the account is to accrue to the tenant. By law the landlord may not benefit financially from the tenant's deposit and may not contract out of paying interest.

4. Rent due on the seventh

An  urban myth often rears its head in rentals where tenants are under the misguided notion that there is a common law 'grace period' for payment, giving them till the seventh of the month to pay. Often disputes arise when landlords or agents neglect necessary works and repairs that may render property unfit or uninhabitable. The fact is, no such law exists. The lease is the indicator of when the rent is due and failure to pay the rent the agreed date will place the tenant in breach of the lease. At Harcourts (together with you as a Landlord) , we make sure  that all tenants understand the payment method and due date, as well as the consequent results for late payments.

5. Failure to do inspections and make records

This deadly sin committed by landlords and agents alike causes more disputes than any other.  Neglecting to do an incoming and outgoing inspection is required by law. The landlord or agent (Harcourts) needs to jointly inspect the property with the tenant at commencement and termination of the lease, and record the current state of repairs of the property. Photographs of the faults are a more secure way to eliminate disputes at the end of termination. It will be easy to refer to the condition if you have something to compare it with.

6. Failure to plan and execute maintenance

As a Landlord you are obliged to offer the property you rent in a fit and habitable condition, which does not prevent the reasonable day to day enjoyment of the property. It is prudent as a landlord to ensure you earmark a percentage of your rental income towards maintenance. It will mean you attract good tenants and keep current tenants happy. Fair wear and tear is inevitable, and it is wise to maintain a good state of repair in your rental property. It is up to the tenant to inform the landlord or agent immediately about maintenance issues. These small niggles can become big issues later if it is not attended to promptly.

7. Failure to give adequate notice of breach

The final deadly sin is the failure to efficiently and swiftly advise a tenant in writing of a breach of tenancy. Getting a defaulting tenant to pay or vacate requires swift decisive action.  Do not hesitate to notify a tenant of their breach of tenancy by the fifth day of the month if rent is due on the first. It sets a clear boundary and if legal action is necessary then you have already expedited the process. The first question a magistrate or a judge will ask is if the tenant was adequately given notice. If not most courts will request this done before action can be taken.

Avoiding these seven deadly sins will ensure that tenants are happy and landlords are able to make the most of their property rental portfolio. At Harcourts, the rental division,  take great pride in our 'clean' portfolio as we take great care not to commit any of these 7 deadly sins. For us Landlords as well as Tenants are equally important. Call us when you are looking for an exceptional standard of rental management service. Excellence is what we do.  Liaan Haupt, Principal Rentals, liaan.haupt@harcourts.co.za 042 294 0921