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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2,009 thoughts on “How Consumer Protection Act Affects Lease of Property — Part 2”

  1. Hi.
    Our company signed a lease agreement for a year which expired on the 30th July 2015. After negotiation we agreed to continue the lease on a month to month basis. We have now decided to move out and gave notice of 1 month on the 7th September 2015 although we are moving out sooner (14/09/2015). The landlord insists that we give him a calender month’s notice which will run from the 1st October 2015 to the end of October 2015. Is this correct?

    1. Hi Melinda

      When a fixed period lease comes to an end, unless there’s an intention to renew for a further fixed period, the lease reverts to a month-to-month basis on the same terms and conditions as the previous lease. Either party has the right to terminate with a months notice.

      Unless specifically provided for in the terms of your agreement, a month’s notice means a calendar month and it must be given by no later than the first day of the month for vacation at the end of that month.

  2. From date of signature of lease ( eg ) 1st sept 2015 is there a 5 working day cooling off period?

    Thank you for all your informative help

    1. Hi Jennifer,

      There’s a 5-day cooling off period applicable to any transaction that comes about as the result of direct marketing. The cooling off period starts on day of signature and ends on the fifth business day, excluding week-ends and public holidays.

      An example of direct marketing would be if you saw an advert and then immediately went and signed a lease. Of course, in practice this rarely ever happens. Like most people, you probably viewed the property before you signed. In that case the decision to sign was not the result of direct marketing; no cooling off period would apply.

      If you’re stuck with a lease you don’t want, perhaps you can try to limit your liability by helping to find a replacement tenant.

      Best of luck, and thanks for your contribution.

  3. Hi.
    I would like to know if my landlord can increase my rent twice in under a month? We do not have any written agreements and November will only be a year.

    I agreed to the first increase due to inflation but now he wants to increase it again.
    Please can you give me the advice I need?

    1. Hi Chantal,

      In the absence of a written agreement, you’re on a month-to-month basis. This means that either party may give the other a month’s notice. The landlord can give you a month’s notice if you are unwilling to pay the extra, or you could give him a month’s notice if you are not willing to pay the increase.

      This is the nature of month-to-month agreements. A fixed period lease provides protection against unexpected increases as the rental is set for the duration of the lease period. Perhaps you could suggest a longer term lease and ask your landlord to draw up an agreement; see what happens.

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