The New Consumer Act and the landlord

JOHANNESBURG – The Consumer Protection Act which comes into effect on April 1 2011, has raised several concerns, among them the lack of protection for landlords who feel the new legislation will offer them little recourse in the way of defaulting tenants. The Act provides ample protection to investors and homeowners in their dealings with unscrupulous estate agents. However, some landlords feel the legislation leaves them in the lurch.

Numerous property experts and members of the legal fraternity Moneyweb has spoken to have largely welcomed the new legislation, but have voiced concerns that many of the clauses have been left wide open for interpretation. One of them pertains to the relationship between the landlord and the tenant, particularly with regard to the so-called 20-day lease.

Property investor, Marius Muller, paints a possible scenario. Say two individuals enter into a lease agreement for a year, with the tenant, for simplicity’s sake, having to pay rental of R1 000 a month. The tenant in turn has also requested some changes be made to the apartment before occupation, for example, under floor heating to be installed. This could put the landlord out of pocket. So he/she approaches a lending institution for a loan, which they are granted based on the fact that they will have a fixed rental income for at least a year. Say, as a landlord, you borrow R10 000 to cover your costs.

In terms of the new Act, the tenant will only be obliged to give the landlord 20-days notice should they wish to terminate their lease. In this case, say the tenant gives notice six months into the lease. This could leave the homeowner with a shortfall of R6 000 for the rest of the year. Under the former legislation the homeowner would have had some recourse in suing the tenant for the rental lost and for the costs incurred prior to occupation. In terms of the new Act, a landlord will only able to sue for 10% of revenue lost, in this case 10% out of R6 000, which is R600. Also, it does not make provision for claiming for the expenses incurred prior to occupation of the dwelling. Landlords and tenants are also not able to draw up a private agreement to ensure the protection of both parties as this will be circumventing the provisions of the Act.

While landlords may feel vulnerable under the new Act, tenants will enjoy more rights. In the past tenants often found themselves holding the short end of the stick for not paying attention to contracts’ fine print. The previous Act made no provision for recourse in this regard, but this will change under the new legislation. The law will now determine whether or not a landlord’s actions were fair and equitable, irrespective of the contract. If not, they will be held liable.