O-YES Properties | What lockdown means for tenants and landlords

What lockdown means for tenants and landlords

South Africa is facing a major change in daily routine as President Cyril Ramaphosa has issued a 21-day lockdown in order to stem the COVID-19 pandemic – came into effect at Midnight on Thursday, 26 March. This calls into question crucial processes within the property market – specifically within the rental arena.

While property transfers are expected to be delayed, how will the lockdown affect people who were expecting to move into a new home?  Similarly, landlords who have been struggling with late-paying tenants might also be wondering about the eviction process right now?

All tenants who were due to move at the end of March will now need to do so before midnight on Thursday 26 March, or they will have to remain in place at least until after the nationwide lockdown, which currently ends at midnight on Thursday, 16 April.

The State of Disaster regulations prohibit one from moving from one home to another during the lockdown period, and it would also be advisable in these times for tenants to ensure that their new home has been properly cleaned and sanitised before they move in.

If tenants could move in before 26 March, they will also not be required to pay rent until they can take occupation.

These circumstances are beyond their control and the landlord or agent will not be able to let the property to someone else during this lockdown, even if it’s empty.

Taking care of your tenants

In fact experts believe now is the time for the industry – both the landlord and tenants to be considerate of the unprecedented circumstances the market finds itself in.

In places where the pandemic has a tighter grip, legislative measures have been put in place to protect renters. Around the world, cities in the US and countries including Spain have temporarily halted evictions in response to the COVID 19 pandemic.

Meanwhile, the best advice for landlords with tenants currently in place who are supposed to move out by 1 April, is to offer them a one month extension on their lease so that they can also remain in place during the lockdown. They will also then be liable for rent for that month.

Similarly, for those who have been given notice or have given notice to vacate their current home by 1 April, the best option actually would be to talk to the landlord/ rental agent about getting a month’s extension yourself. This will of course make you liable for another month’s rent where you are.

Landlords need to know what options are open to them if tenants lose their income due to the lockdown or the economic effects of the Covid19 pandemic.

If they are quality tenants who have previously always paid their rent in full and on time, we would suggest that they be asked to sign a waiver to the effect that their deposit may be used as rent for a certain time instead of it having to be held in trust.

It would be best if this agreement was drawn up by a professional rental agent and it should also contain a provision that the deposit is to be re-instated, perhaps in instalments, by a certain date, and that the landlord will be able take legal action if the tenant reneges on this arrangement.

It’s clear that many will find themselves in a financial bind during this time. This is where Dippenaar says landlords will need to consider their own financial health and those of the tenants carefully.

We urge landlords to exercise leniency in the case of good tenants who suddenly cannot pay their rent because they have lost their jobs or income due to COVID 19. If a tenant has a history of timely payments and full compliance with the terms of the lease, they should be treated compassionately and a repayment plan worked out when the crisis is past.

 Give good tenants a pay holiday

Alternatively, he says, landlords may decide to give good tenants a ‘payment holiday’ during the lockdown or even for the next couple of months, especially if they have been given a similar indulgence by their bank on their home loan instalments. The banks are currently working on plans to suspend certain loan payments during the lockdown.

However, they do need to proceed with caution and make sure there is a written agreement in place that provides for them to withdraw the indulgence under certain circumstances, for the unpaid rent to also be re-instated before the end of the lease, and for them to be able to take legal action if the tenant reneges on the special arrangement.

When it comes to tenants who had been given notice to move because they were already defaulting on their rent, Schaefer says landlords may now be obliged to let them stay on at least until the end of the lockdown period.

“However, if they again don’t pay rent, it is important that the landlord or rental agent keep reporting this to the credit bureaux and continuing to follow the correct legal procedures so that the eviction process can begin promptly after the State of Disaster is lifted.

On a different note, landlords with units in sectional title (ST) schemes - and especially large, multi-storey buildings should find out as soon as possible what the situation will be during the lockdown as regards the maintenance of lifts, cleaning of the building and refuse removal, and advise their tenants accordingly.

Courtesy of Property24 | Andrew Schaefer of Trafalgar | Simon Dippenaar of Simon Dipenaar & Ass.
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