Friday, February 8, 2019

High Court confirms, Rental Housing Amendment Act not law … yet

Don’t prejudice yourself by pre-empting the promulgation of the law and changing your lease agreements early.

Kondile v Canary and Another

The recent case, Kondile v Canary and Another was heard in the Pretoria High Court on 7 May 2018 on an application to have a Rental Housing Tribunal ruling rescinded or overturned by the High Court.
In his Judgement, acting Judge Nel confirmed that ‘on 5 November 2014 the Rental Housing Amendment Act, No. 35 of 2014 ("the Amendment Act") was assented to, but it has not yet come into force, as it has not been promulgated.’

Why jumping the gun is dangerous

It is risky business to pre-empt the law. In doing so, you might prejudice either party and cause confusion as to what the real rights and obligations between the parties in the rental relationship are. For example, the Rental Housing Amendment Act requires formalities to be fulfilled that the current Rental Housing Act does not.

Any new clauses added to a current lease agreement that directly refers to the Rental Housing Amendment Act would be incorrect in law.

Trying to rely on the Amendment Act when it is not yet in force could leave you with little recourse should litigation be your only option.

When does the law become the law?

It is a fact. The Rental Housing Amendment Act 34 of 2014 is not yet in operation. An Act becomes operational only after it has been promulgated which is a process of publication of the official date from which the Act needs to be complied with.

Effectively, it is the start date when new legislation becomes law in the day to day practical sense, for you and me. This date is published in the Government Gazette by the President. And as of yet, no such date has been published.

Similarly, the Prevention of Illegal Eviction from and Unlawful Occupation of Land Amendment Act (PIE) was signed off on in November 2007 and is still not in operation 11 years later! The Protection of Personal Information Act 4 of 2013 (POPIA) is not yet operational either and has been awaiting promulgation for 6 years.

The Rental Housing Amendment Act promises to be no different. Once it is promulgated, it is expected that any new obligations on the landlord or tenant will only become effective 6 months from the date that the Act has come into force.

Why it could still be a while …

The new Amendment Act brings with it a number of changes that require development and training to ensure that nationally, the public is better supported through the Rental Housing Tribunal.

This includes the MEC for Human Settlements having to set up a panel and appointing suitably qualified chairpersons and members of each Rental Housing Tribunal.

The intention to appoint any new members must be made public in the Government Gazette and in the media and brought before the Provincial Human Settlements portfolio committee. 

These newly appointed members must again be pronounced in the Government Gazette once officially selected.

With many areas not yet served by a Rental Housing Tribunal at all, this government process could in all likelihood take a while.


The TPN LeasePack does not place any obligations on a party that is not required by law.

Once the Amendment Act is actually promulgated, TPN Credit Bureau will, as always, be at the forefront in providing a lease agreement that is fully compliant with all applicable and current law.

To ensure that you are using the best possible lease agreement to not only give the landlord and tenant the protection they have in terms of law but also to set out all current obligations in law, make sure you have downloaded the latest version of your LeasePack agreements. 

To update your LeasePack:

Kondile v Canary and Another (2018):

Monday, October 8, 2018

Early cancellation penalty - what’s reasonable?

One of the most frequent queries we receive at TPN Credit Bureau goes something like this, “… my tenant just gave 20 days’ notice to cancel their lease, what can I do?”

We understand the frustration when a tenant exercises their right to cancel the lease early using the Consumer Protection Act (“CPA”). Fortunately for you as the landlord, the CPA does provide a way to recover the financial losses that you suffer.

In terms of the Act, when a fixed term agreement is cancelled by a consumer (tenant when it comes to lease agreements), a supplier (the landlord) may impose a reasonable cancellation penalty with respect to goods supplied.

If the tenant is human, the CPA applies

It is important to pay attention to who you as the landlord are and who exactly you are leasing to. The early cancellation portion of the CPA specifically excludes lease agreements where both the landlord and the tenant are juristic persons (companies, close corporations, partnerships, trusts etc.).

For example, if your property is held in a company and you are renting to another company then there is no option for the tenant to cancel the lease early using the CPA and you have the right to enforce your lease agreement to its full term.

The situation above is not considered the norm, so let’s assume that you as a landlord are leasing to a human tenant. In this case, the CPA specifically gives a tenant the option to cancel a lease agreement by giving the landlord 20 business days’ written notice should they wish to cancel the agreement.

It is very important that the notice is provided in writing and that you are given business days’ notice not calendar days (weekends and public holidays are not included). Once you receive this notice which complies with the requirements on expiry of the 20 business days, the lease is cancelled.

So, what’s a reasonable fee?

The CPA goes on to say that you can impose a reasonable cancellation penalty when the tenant validly cancels the lease in terms of the Act. But what is considered a reasonable cancellation fee?

Defining what is reasonable has proven to be a debatable topic as the Act does not provide a guideline for what it considers to be “reasonableness”. We are instead guided by what we have noticed are the repeated findings of the Rental Housing Tribunal.

The Tribunal focuses on actual losses that have been suffered by the landlord. The tribunal also places an onus on the landlord to take positive steps to find a new tenant to replace the one they are losing.

The most common losses that we see are advertising costs, the agent pro-rata finder’s fee and rental losses suffered as a result of being unable to secure a new tenant. Advertising costs and the agent finder’s fee are fairly straight forward costs to quantify.

The sticking point is often the rental losses. As a general rule of thumb, the tribunal awards up to 2 months rental in the event that the landlord has been unable to secure a tenant for those 2 months.

It's always about actual losses suffered!

If the landlord receives a notice to cancel with effect of the middle of the month and you are able to secure a new tenant to take occupation on the first day of the next month, then the current tenant could be charged for:

  • everything owing up until the date of cancellation,
  • the remainder of the month’s rent,
  • advertising costs incurred, and
  • the pro-rata agent finder’s fee commission for the balance of the lease.

These penalty fees can also be quantified and deducted from the tenant’s deposit before you refund it to the tenant but after damages have been deducted when they vacate the property.

The reasonable penalty fee assists landlords to avoid being financially blindsided by a tenant’s early cancellation by providing a buffer of up to 2 months if they are struggling to secure a new tenant.

For more information on how the CPA applies to lease agreements, please watch the TPN Training video here:

Monday, March 19, 2018

How much commission do agents in SA charge?

Rental mandates are the source of a rental agent’s livelihood, it determines the agent’s duties and importantly the commission payable. While rental mandates fall into two common categories: “place the tenant only” or “place the tenant and manage the property”, the commission charged varies widely.

How much commission do agents in SA charge?

The TPN Commission Survey results are in:

Rental mandates to “place the tenant only” indicate some agents take home as little as 1% while others comfortably charge 15%.

The commission of rental mandates to “place the tenant and manage the property” are structured either as:
  • An upfront placement commission and then monthly management commission; or
  • Simply as a monthly management commission (which includes the placement commission)
And this commission combination kicks off in the single digits at 5.5% pushing up to 27.06%.

As a side note, given the increasing number of tenants who cancel their leases early, the rental agents who charge a placement commission in addition to the monthly management commission are protecting their payment for work performed, as they are able to charge the pro-rata cost of the placement commission onto the tenant for the early cancellation as part of the reasonable penalty to find a replacement tenant.

Click here for the Commission Survey Results for the lows, the highs and the average commission.


Tuesday, October 3, 2017

FICA Amendments - BIG fines for non-compliant estate agents

There has been a critically important development for accountable institutions, which specifically includes estate agencies, regarding FICA. A development which if ignored could cost you R10 million in penalties for non-compliance in your personal capacity and up to R50 million as a company!

Are you compliant yet?

On the 26th of April this year, the Financial Intelligence Centre Amendment Act was signed in to law by the president and as a result it was enacted by the Minister of Finance on the 2nd of May.
What you need to know is that the Act imposed new obligations on accountable institutions, including all estate agencies. These obligations have been implemented to combat crimes such as money laundering and the funding of terrorist organisations.
An important obligation which comes into effect today (2nd October 2017) requires that every accountable institution must develop, document, maintain and implement a Risk Management and Compliance Programme (“RMCP”) which will replace the internal rules currently need to be formulated and implemented by accountable institutions.

What is this new Risk Management and Compliance Programme (RMCP)?

The RMCP is a company policy implemented in which the accountable institution sets out how it will go about ensuring that it fulfils its obligation to identify, assess, monitor, mitigate and manage the risk that the services or products offered by that institution may be used to carry out the crime of money laundering or the financing of terrorist activities.
The accountable institution’s RMCP must set out the manner in which the institution will go about meeting the obligations under the Act.

These obligations include:
  • The conducting of due diligence when establishing, maintaining and monitoring new and ongoing client relationships.
  • How the accountable institution will act when they suspect client activity which is suspicious or unusual in line with the Act.
  • How the accountable institution will attend to terminating an existing business relationship where the suspicious or unusual activity is confirmed.
  • How the accountable institution will report any suspicious activity or transactions to the Financial Intelligence Centre.

You could be fined R10 million!

The most important thing to note is what happens if you fail to have a programme in place. Failure to implement a RMCP constitutes non-compliance in terms of FICA and opens the institution up to liability for administrative sanctions.

The administrative sanction may take a variety of forms including, amongst other things, a caution and/or restricting the business activities of the institution and/or a financial penalty of up to R10 million for a natural person or up to R50 million for a legal person per instance of non-compliance.

The penalties for non-compliance clearly cannot be ignored!

TPN LeasePack (Residential and Commercial) and SalesPack now contains:

  • A Risk Management and Compliance Programme: you are required by FICA to implement such a Programme. TPN’s programme is available to download immediately. Next you must assign a responsible party from senior management to complete and implement. With final sign-off by the Principal.
  • FICA Forms – no need to retroactively re-FICA your existing clients; simply download the FICA Form for all new clients (landlords or sellers).

TPN LeasePack members can get cracking & download the

"Risk Management and Compliance Programme" here.

Monday, June 12, 2017

Con Court reminds us evictions are technical

TPN PropBay  |  TPN RentBay 

Constitutional Court: municipality to provide housing if eviction means residents are homeless

There was a tangible sigh of relief for 184 low-income residents last week after a rescission order against their eviction was upheld by the Constitutional Court. Some of the residents having occupied their homes at the Kiribilly block of flats in Berea, Johannesburg for more than 26 years.

Michelle Dickens MD of TPN a property specialist credit bureau, highlights an important aspect of the ruling to understand, “Contrary to current reports, the judgment is not a dismissal of an eviction application by the Constitutional Court. In fact, the Constitutional Court ordered that the matter be referred to the South Gauteng High Court to be dealt with on an expedited basis and most importantly, that the City of Johannesburg be joined as a party to the proceedings.”

The reason that the Constitutional Court upheld the appeal against the eviction was that occupiers would legitimately be left homeless and destitute should the eviction order be granted. Cilna Steyn, managing director of SSLR Inc. clarifies this in the light of her extensive experience in property litigation, “We have seen many court orders including orders from the Constitutional Court compelling municipalities to provide alternative accommodation to occupants who will be left homeless because of an eviction order being granted. In this particular case, the City of Johannesburg was not a party to the proceedings.”

The Constitutional Court order does therefore not change the legal position pertaining to evictions. It is however important to note that the eviction order was initially granted based on an agreement reached between the parties at the initial eviction hearing. The occupants were apparently not properly advised at the time of the effect of this agreement, which is why the Constitutional Court held that it was not satisfied that they were fully aware of their rights to defend the matter.

Steyn continues to explain that, “The PIE Act is an extension of section 26 of the Constitution which prohibits evictions without a court order. Once the court has fully familiarised itself with the personal circumstances of the occupant, it details the process that should be followed to successfully obtain an eviction order. If the provisions of PIE are not followed to the letter, no court will be allowed to grant an eviction order.

We clearly notify illegal occupants of their right to attend court to defend the matter. To satisfy the court in this regard, we always ensure that the contact details of legal clinics and institutions that provide free legal services are provided.”

The PIE Act further provides that a court ‘must’ grant an eviction order if the court is satisfied that the provisions of the Act has been complied with and if the occupiers would be left homeless and destitute, the local municipality will be ordered to provide alternative accommodation.

Dickens confirms this saying that, “in practical terms, should you comply with the provisions of the PIE Act and ensure that the municipality perform their constitutional duty to provide alternative accommodation, the court must and therefore will grant the eviction order.”

For more practical tips on successful evictions please visit: Form Factory

Thursday, October 6, 2016

A letter of demand, is a letter of demand... or is it?

TPN PropBay  |  TPN RentBay 

Nothing is more frustrating than seeing poorly drafted letters of demand written by “professional” practising attorneys simply ignoring the National Credit Act’s requirement of “notice of intention to list on a credit bureau.” The consequence of these inadequate letters in the market place has the ramification that the early removal of the default effectively allows the tenant to get away with their non-performance.

The stark reality is that not all letters of demand are created equal. How so? Your ability to successfully blacklist a non-paying tenant is entirely dependent on the letter of demand that you send. If it is incomplete or inaccurate in any way, it can fail so spectacularly that the silence of your tenant’s non-performance is deafening.

Why letters of demand are bombing

TPN is seeing a marked increase in the number of LOD’s that are actually adding to the already exorbitant loss of a non-paying tenant rather than mitigating it. Crazy? We would say so.

There is a reason all this is happening: not everyone in our industry understands the implications of the National Credit Act. This has little to do with competence and everything to do with not fully understanding and integrating the nuances of our rental law with the requirements of the National Credit Act as it applies to credit bureaus.

In simple terms, it means that you cannot successfully blacklist a tenant unless you have sent a letter of demand that contains the accurate, legally compliant clause required by the NCA.
In short your letter of demand must notify your tenant of your intention to list on the credit bureau.
 If not, your attempt at loading a default will be dead in the water.

The latest directive from the National Credit Regulator

In a directive sent out earlier this year, the National Credit Regulator has made it clear that if a listing is removed, it may not be re-listed under any circumstances. Therefore, you only get one bite at the apple!

If you do not notify the tenant of the intention to list a default in your letter of demand, you cannot list the tenant. And if you do continue to load the default because you or your legal representative didn’t know any better? It will be removed and you cannot re-list the information. Ever.

Not only can anything happen to anyone at any time, but it also happens with varying degrees of gravity. If you combine that kind of uncertainty with the very complicated set of legislative requirements that currently intertwine in our rental law, you can easily be lead to taking the wrong action. Considering how rapidly the financial implications of that can snowball - it is just not worth it.

The solution is remarkably simple: make sure you send a letter of demand that genuinely gives you your power back - like the TPN letter of demand. In our experience, it is the only thing that really works.

Wednesday, May 25, 2016

Mould kills celebrity couple

TPN PropBay  |  TPN RentBay 

Bricks and mortar provide us with protection from an increasingly harsh environment. But what if your haven of safety - your home, could unknowingly be causing you harm?

Although a patch of mould may seem harmless as it first spreads into view, it can invade far more than the musty corners of a room. In fact, it poses a very real threat to human health. In 2009, a celebrity couple died only months apart, both from pneumonia and anaemia which was reported to have been a result of the extensive mould found in their Los Angeles mansion.

What is mould exactly?

Mould is a type of fungus which causes the breakdown of various natural materials. Not all mould is bad however, it is actually highly beneficial in the production of antibiotics - the mould Penicillium naturally produces penicillin which has saved an estimated 200 million lives.
It can also be the very cause of disease due to one of three reasons: an allergic reaction to mould spores; the growth of pathogenic moulds in the body or toxic mould compounds called ‘mycotoxins’ being ingested or inhaled.

What symptoms result from mould exposure?

Studies in 2003 of more than 1600 patients who suffered from health issues as a result of exposure to mould, experienced a range of symptoms: muscle and joint pain; headaches; anxiety; memory loss and visual disturbances; immune system disruptions, fatigue; digestive issues and shortness of breath.[i]

A mould allergy can cause itchy watery eyes, constant coughing, headaches or migraines, rashes, tiredness, sneezing and sinus problems.[ii]

An analysis of mould and mental health conducted in Europe and published in the American Journal of Public Health has concluded that ‘the risk for depression went up by 40% among people who lived in mouldy homes.’[iii]

The extent to which mould affects someone’s health is dependent on the type of mould and the amount of mould present, the individual’s sensitivity to mould and their existing state of health.

TPN attorneys dealt with a serious case of mould in 2011 where a family rented a property in the suburb of Brooklyn in Pretoria: “It was a stately home built in the late 1970’s with fantastic wooden floors and pressed ceilings. From the moving date, the family loved the archaic monument yet something was amiss. The mother suddenly became very ill. No one had an answer to her seemingly incurable ailment no matter how many doctors were consulted. It was only on the second biopsy that it was noted that mould spores were present in her lungs. The family immediately moved out of the property and a team equipped with white Hazchem suits, breathing apparatus and testing equipment was sent to inspect the property thoroughly.

What they found was disturbing to say the least. With older, water-damaged properties, mould can flourish almost everywhere. While most are harmless to humans, in some cases if the spores are inhaled, it can cause major illness. These types of mould are so dangerous that they can cause irreparable harm to your person and even death. Studies show that mould or spore exposure is actually more dangerous than intense exposure to heavy metals.

In this instance, due to the property being inhabitable, the tenants were released from their agreement without penalty or fault and the property was thoroughly examined, cleaned and revisited to ensure its viability for safe habitation. We are certain there are thousands of properties around South Africa that face similar if not worse mould problems.”

What types of moulds are there?

Allergenic moulds produce life-threatening effects and are problematic if you are allergic or asthmatic.

Pathogenic moulds produce an infection if someone has a compromised immune system. The mould can grow in the lungs of an immune-compromised person and cause an acute response similar to bacterial pneumonia.

Toxigenic moulds can have serious health effects. Mycotoxins are the chemical toxins found on the surface of the mould spore which is inhaled, touched or ingested. It can cause a suppression of the immune system and even cancer.[iv]

The 5 most common indoor moulds

  • Alternaria: found in your nose, mouth and upper respiratory tract which can cause allergic reactions.
  • Aspergillus: found in warm, damp climates; produces mycotoxins and can cause lung infections.
  • Cladosporium: mostly found outdoors but it can find its way indoors onto tiles, wood and damp materials; it causes hay fever and asthma.
  • Penicillium: Found on wallpaper, fabrics, carpets and fibreglass insulation. It causes allergies and asthma, some species produce mycotoxins such as penicillin.
  • Stachybotrys: often referred to as ‘black mould’ produces mycotoxins that cause serious breathing difficulties and bleeding of the lungs. It is found on wood or paper products but not on concrete or tiles.[v]


What causes it to grow in the first place?

Mould requires moisture and warmth to grow and is often found in damp, warm areas. It can enter a home through windows, vents, doorways and air-conditioning systems. It attaches itself to clothing, linen, pets and surfaces.

The most common places mould can be found are on the roof; windows; pipes; tiles; wood; wallpaper; insulation; carpets and upholstery - on any surface that it can decompose.[vi]


How can I protect my property?

The US Centres for Disease Control and Prevention suggests the following to avoid a mould problem:
  • Use an air conditioner or a dehumidifier when humidity is high.
  • Ensure your home is properly ventilated.
  • Mix mould inhibitors into the paint you use on surfaces around the property.
  • Clean the bathroom and kitchen with products that kill mould and mould spores.
  • Keep your kitchen and any dark, damp room carpet-free.
  • Replace upholstery that has been exposed to moisture as soon as possible, or at least remove it.


Naturally, besides the preventative measures outlined - it is imperative to ensure that a property is well-maintained at all times. One of the most important aspects is the early detection and rectification of any underlying sources of damp, such as floods or leaks.

The TPN LeasePack Residential lease agreement provides that the tenants must timeously complete any repair work for which they are responsible, for example: erecting a washing line in the bathroom without proper ventilation with the resultant continuous damp causing a growing mould problem.

If the tenant discovers that maintenance or repair work needs to be done for which they are not responsible, for example: where the growth of mould is a result of fair wear and tear, the tenant must inform the landlord in writing as soon as is reasonably possible. If the tenant fails to do so, the landlord is entitled to claim damages for the repairs from the tenant.  In this way, the landlord is protected from discovering that a massive mould issue has suddenly sprouted before it develops into a serious health risk.

[i] Why Almost All Sinus Infections Are Misdiagnosed and Mistreated, 10 Sep 2011,
[iii] Mould May Make You Depressed, 31 Aug 2007,
[iv] Why Almost All Sinus Infections Are Misdiagnosed and Mistreated, 10 Sep 2011,
[v] Why Almost All Sinus Infections Are Misdiagnosed and Mistreated, 10 Sep 2011,
[vi] Is that Mold in your Home Toxic, 22 Jan 2015,