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

1,875 thoughts on “How Consumer Protection Act Affects Lease of Property — Part 2”

  1. Hi John
    I have tenants in my house and renting out through rental agents.
    There was natural damage to my house in June which I was not made aware of. They actually only informed me of this today.
    Because it is 3 months along the line, my insurance does not want to pay out the damages as the claim was supposed to be logged within I think they said 2 weeks.
    Who is responsible for repairing this if my insurance would’ve done it if I claimed in time?
    Thank you

    1. Hi Charlene,

      Without seeing your documentation it’s a little difficult to comment. You really need to consult with an attorney who can peruse your rental agreement, your mandate agreement with the agent and your insurance contract. Only an attorney can really give you an indication as to who may be liable for the damage and what the best course of action might be. If it turns out that your agent has been negligent you may have legal recourse.

  2. Hi John

    We have a lease agreement with a rental agency, for a year. When we went to view the property the first time there was a lot of work to be done. On the date we were to move in the owner as well as the rental agency promised that everything that still needed to be done will be done.

    It is now 6 months later and still nothing has been done. It is appalling conditions at this stage and when we offered to fix it ourselves and to then deduct from the rent they agreed at first. After we started some of the repairs, the agency informed us that the owner now wants to sell the property and he therefore will no longer be fixing anything and we are also not allowed to make the repairs.

    Do I have the grounds to give a months notice without being liable for the rest of the lease term rent as I feel that the owner and agency have breached the contract?

    1. Hi Shaneen,

      If you terminate with a months notice, unless you are on a month-to-month lease, you may be held liable for the balance of the lease period. You could also lose your deposit in the process.

      Instead, you could try to negotiate an amicable outcome. Your landlord may be a distressed seller who is in a precarious financial position. This could well be the reason why the seller has placed the house on the market even though it’s hardly in a saleable condition at present. It may be difficult to attract a buyer if there is work to be done on the property, particularly if there is a lease in place; a new owner is obliged to honour any existing lease agreement.

      In the event that your landlord agrees to cancel the lease, you should consult with an attorney to ensure that you extricate yourself from this situation without suffering any unintended consequences. If your landlord refuses to come to the party and remains in breach of your agreement, it’s time to see an attorney anyway. An attorney can put your landlord to terms and help you cancel the contract.

      Best of luck.

  3. Hi John

    I signed a one year lease commencing 1 April 2012. I have lived in the property since. There has been no communication from the landlord regarding renewal of lease in over two years. I assumed it fell to a month-to-month contract based on the initial agreement.

    In the lease agreement signed it states “Should the option be taken to renew the lease, the rent for such further period payable similarly shall increase at 8% per annum”

    I was then contacted on 26 August 2014 via a note in my letterbox from the landlord, explaining that as rent had not been increased in 2 years, I am now expected to pay the twice increased rent as well as pay the full retrospective amount that would have been owed if renewals had taken place.
    I.e. Monthly I now ‘owe’ my current rate + 8% + an additional 8%. I am also expected to pay the outstanding amount that would have been incurred if renewals had taken place timeously.

    I thought, based on CPA, this was an illegitimate claim?

    Please advise!

    Thank you so much.
    Regards
    Alix

    1. Hi Alix,

      You are correct in assuming that the initial contract would revert to a month-to-month contract, but it would be on the same terms and conditions as the original fixed period lease. So may be safe to say that the landlord is entitled to implement the increase that you agreed to contractually.

      I’m not to sure about the ‘arrear’ rentals your landlord is demanding. It may be best to consult with and attorney, have your contract perused, to see how your lease agreement addresses the issue.

      Good luck.

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