How Consumer Protection Act Affects Lease of Property — Part 2

Cpa and Lease Agreements
How the CPA effects new Lease Agreements. — Photo: jimtim0505 on Flickr

South Africa’s new Consumer Protection Act comes into effect on 1 April 2011. Part 1 covered the introduction of a “Cooling-off” period and the use of “Voetstoots” clause under the new CPA legislation.

Part 2 deals with some important changes to the law governing Lease Agreements, when the new CPA comes into effect on 1st April.

Now some of my more astute readers will have noticed that this is also April Fools Day. Please people, this is purely co-incidental, however inopportune the date may seem.

Lease Agreements: The CPA introduces some far-reaching changes to Lease Agreements for immovable property. Specifically for ordinary people, the changes affect the maximum duration and grants the parties certain rights of cancellation.

Note that Leases to “Juristic Persons” fall outside the ambit of the CPA. “Juristic Persons” includes Closed Corporations, Companies, Trusts, Partnerships and Associations. No distinction is made between Commercial and Residential property.

Duration of Lease: The maximum duration of a Lease Agreement is 24 months.

Right of Cancellation: The Lessee (consumer) may terminate the Lease at any time after giving 20 (business) days notice, effectively one month. The Lessor must give 20 (business) days notice to cancel for a ‘material failure to comply with the agreement’ and must give 40-80 days notice that the agreement is coming to end.

After expiry, the lease continues on a month to month basis unless the Lessee agrees to a further fixed term.

From the above it can be concluded that the new Consumer Protection Act will bring some much-needed protection for consumers to the market place. Most think that it is also likely to result in Leases being contracted more readily with “Juristic Persons” and not the ordinary consumer. So a spike in Letting to “Juristic Persons” seems likely.

Similarly with the Selling of Property, Transfer Duty from the sale of property to “Juristic Persons” has recently been adjusted downwards to be on par with the Transfer Duty payable by an ordinary consumer. So the trend may be toward a greater number of sales to “Juristic Persons,” than would otherwise have been the case.

The Rental Housing Tribunal already administers a similar (to the CPA) scheme under the Rental Housing Act. It remains to be seen if this body will, in terms of Section 5(3) of the CPA, apply for an ‘industry-wide exemption’ to provisions of the CPA that overlap the Tribunal’s functions.

If there is anything you would like to add, please feel free to do so in the comments.

Source: Bisset Boehmke McBlain
Photo Credit: jimtim0505 on Flickr

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1,965 thoughts on “How Consumer Protection Act Affects Lease of Property — Part 2”

  1. Hi,

    I have signed a lease contract for 12 months about 2 weeks ago for the period starting 01 May 2015. The owner did not sign the contract or install the water and electricity meter until yesterday, according to the estate agent. I paid the deposit and rent for 1 month and before I even moved in.

    I found a bigger apartment and decided to cancel my contract with the estate agent and rather move in to the bigger apartment. The estate agent is telling me that I am committing breach of contract and therefore I will not get a cent of my money back. Is this true?

    1. Hi Elsa,

      “Is this true?”

      Yes it is.

      A binding contract has been signed and money has changed hands. Basically, you’re at the mercy of the agent if you cancel now.

      Considering there’s little time to find a new tenant for the month of May, the landlord will miss out on at least a month’s rental. If the apartment is a bit on the small side, as you have found, it could take longer than a month to re-let.

      Fortunately for the landlord, your deposit and one month’s rental is on hand. If a tenant is found for the month of May, you could conceivably have your deposit refunded, or part thereof if ‘costs’ are deducted. This is not as unlikely as it sounds; there may well be a tenant waiting in the wings. Let’s hope so.

      You might know of someone that could take the apartment for the month of May? Can’t think of anything else that might help, sorry.

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