THE GUNSTONS BLOG

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Do you have what it takes to be a landlord?

Given the nature of the economy over the last couple of years it comes as no surprise that many people in South Africa cannot afford to buy homes. This has given rise to a very active and lucrative rental market and those that stand to benefit the most from this situation are those who are able to buy-to-rent. Purchasing a property to lease out can, at the best of times be very rewarding financially and at the worst of times a massive financial strain.

It is important however, at this point to make it clear that rental income should not be considered a passive income. There is a lot of active work involved in making sure you get the returns you want. Now, with the added pressure of the Consumer Protection Act effectively making landlords, suppliers of a goods/services in a legal sense, the obligations have also increased somewhat. For instance, it is the legal responsibility of the landlord to provide a safe and well-maintained home for your tenants including plumbing, electrical work and general household maintenance.

Before you even get that far, if you wish to be a landlord you should first consider the marketing skills you will need to employ. It is up to you to advertise the property (consider times of month that you advertise, and on what platforms to advertise for the desired demographic that should be able to afford your rental). You then have to know how to interview potential tenants, collect references and make sure the successful candidate will be responsible with your property and produce the rental monies at the appropriate times each month.


The duties of the vigilant landlord don’t end there. It is your ongoing duty to ensure that you are providing the services originally offered, so when for example a pipe bursts, you cannot leave it for later on in the year when you have a bit of extra cash for maintenance. Issues need to be dealt with as and when they arise. And they will arise. Most landlords generally find themselves at some point chasing up after even the most well-intentioned tenants for rent payments. It’s all part of the territory.

However, it’s not all doom and gloom. There are certainly ways to make your rental property work for you. There are many professional property management companies in Cape Town that are experienced in dealing with all the cons of leasing property that you don’t want to deal with.

A good lawyer will also be able to draw up a lease agreement that ensures you are protected against defaulting tenants. It has become even more critical that lawyers look over and assess lease agreements with the implementation of the Consumer Protection Act. The Act has essentially afforded a lot more power to the tenants. They are able to cancel leases with just 20 business days notice (no matter how long the original lease agreement was signed for) and where any terms of the CPA have been violated which could include misleading advertising, contract documents and possible disputes over the disclosure of defects the landlord is liable to pay a fine of up to 10% of turnover or R1-million.

The onus now heavily lies with the landlord to make sure your tenant screening process manages to filter out potential tenants that will make this already delicate process more difficult.

Again, we want to reiterate that landlords and potential landlords should not run scared at the sight and sound of all of this. There are two concrete ways in which to ensure you continue to reap the full benefits of your rental property, unless of course you feel like you are proficient in all of the above choose to either go through a professional property management company or make sure you consult your lawyers from the start. They will be able to assist in lease agreements, CPA compliance and will be able to assist with mediation should a dispute arise somewhere down the line.

It all comes down, like with most business ventures, to risk management. Manage your risks well, put fool-proof systems in place (and then still have some back-up) and you will be well on your way to paying off that second mortgage or funneling your retirement fund or reap whatever reward it is you desire through your rental property.

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