Property 24/10 - 147

When a tenant cancels the lease
A fair amount of confusion and dismay has become evident among landlords and tenants following the promulgation of the Consumer Protection Act (CPA) which, among other things, allows a tenant to cancel a lease immediately, no matter what the original agreement specified. This is on the condition that the CPA is deemed to apply to the lease with regards to supplier (landlord) and consumer (tenant) relationships and its relevance in terms of a lease, being a fixed term agreement, accordingly.

Discussing this new dispensation, Wayne Albutt, National Manager of Rawson Rentals says, “There are landlords and agents who have not read the CPA carefully and/or do not understand its relevance and have the perception that their rights have been totally overruled and that the tenant can now do more or less what he likes – but this is not the case.”

In terms of the CPA, says Albutt, the tenant does have the right to cancel the lease even though he may have signed an agreement to occupy the premises for a specified fixed period (for example, six months or a year). Furthermore the tenant can do this without giving any legitimate reason (for example, loss of a job or sickness). However, tenants going this route are now obliged to give the landlord and/or his agent 20 business days’ notice and the landlord is empowered to charge a “reasonable” cancellation penalty.

IEASA signs memorandum with REBOSA
South Africa’s stressed real estate industry has entered a new era with the signing of a memorandum of understanding by its two biggest self-governing bodies.This is according to Jeanne Van Jaarsveld, general manager of Harcourts SA and vice president of the Institute of Estate Agents of South Africa (IEASA), who regards the partnership between the long-established Institute and newly formed Real Estate Business Owners of South Africa (REBOSA) as a major step towards professionalising the sector.

He says collectively, the IEASA and REBOSA represent an overwhelming portion of the real estate industry and together, they intend to change the country’s property landscape in the interests of the public, business owners and estate agents.

Van Jaarsveld believes the partnership is a positive step following the transfer of the Estate Agency Affairs Board (EAAB) from the Department of Trade and Industry to the Department of Human Settlements under Minister Tokyo Sexwale. He says the EAAB is the government-appointed industry regulator so it’s critical that its governance is sound. "The transfer of the EAAB and the real estate industry to Minister Sexwale’s department was a strategic move by Government and one that has proved to be extremely successful.”

Council plans for pre-paid meters
The Eskom tariff hikes just approved by the National Energy Regulator (NERSA) make it even more urgent for the City of Tshwane and various other local authorities around the country to clarify their plans to ensure that every household has a pre-paid rather than post-paid electricity meter.

With the minimum eight percent increase in electricity costs every year for the next five years looming, consumers need to know with certainty who will pay for the installation of the meters and exactly what, if any, benefits they stand to derive if they have to convert from a post-paid meter to the pre-paid system, says Jan Davel, MD of the RealNet estate agency group. 

He says this concerns their industry too because the costs of running a home these days, as well as the proper delivery of council services, are a major consideration for property buyers and sellers. 

At the moment, he says it seems as though the planned total switch to pre-paid that has already been announced by the Tshwane council and the Msunduzi council – and has also apparently begun to be implemented in Johannesburg – is actually only being considered in terms of the advantages to be gained by the local authorities. 

A look at commercial property rentals
Although many tenants continued to battle financially, rental payment performance by commercial tenants during the fourth quarter of 2012 remained surprisingly steady, according to the Tenant Profile Network (TPN).  According to TPN, 82 percent of tenants were in good standing with their rentals compared to 83 percent of residential tenants.

The report reveals that 61 percent paid rent on time, 11 percent made a partial payment, 21 percent paid late and 7 percent did not pay rent at all.

According to the report tenants renting properties priced at R50 000 per month are the most reliable when it comes to paying rent with only 3 percent failing to pay rent.

Tenants renting properties priced below R10 000 a month recorded 10 percent of tenants who did not pay rent which indicates that smaller businesses are experiencing tougher conditions, explains Michelle Dickens, managing director of TPN.

Tokyo appoints new EAAB board members
Human Settlements Minister Tokyo Sexwale announced the new board of the Estate Agency Affairs Board of SA (EAAB) on Thursday.  The 15 members, from various sectors including financial services, justice, the estate agency industry and civil society, were introduced by Sexwale at a media briefing in Rosebank.

The EAAB was dissolved by Sexwale last year after the Wendy Mechanik saga, and the resignations of its CEO Nomonde Mapetla and chair Ina Wilken.

The EAAB was then put under administration.

Lawyer Taswell Papier was appointed as administrator and was tasked with restoring stability to the board, facilitating good corporate governance and reporting back to Sexwale in six months.

The new board's first and urgent assignment would be to appoint its chairperson and CEO, Sexwale said.

Rising electricity costs impact rent
The National Energy Regulator of South Africa (Nersa) have approved an 8% increase in electricity costs, agreeably not the 16% requested by Eskom, but nevertheless a figure still above inflation. However, when viewed against the previous 25% per annum increases, is this lower increase not a little bit too late for most consumers?  Tenant Profile Network's (TPN) research indicates residential tenants are already over-exposed to the high cost of electricity. By way of example, a tenant in a two bedroom townhouse over a 5 year period provides tangible evidence of the rising cost of electricity. In June 2009, the average monthly cost of electricity for Joe (your average tenant) was R 192.40: this amount has risen year on year to a monthly cost of R 202.14 in 2010, R 351.07 in 2011, R 626.33 in 2012 and R 814.70 in 2013.

Joe’s case is not isolated and most consumers would relate personally with this increase pattern. In fact, the cost of electricity has increased so disproportionally with the cost of living that Joe’s electricity cost now makes up 19% of his overall rent and electricity bill compared to only 5% in 2009.

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