The Consumer Protection Act (CPA) came into effect on April 1 and as yet there is no clear indication of how the act will affect property rentals.
“To date the Minister of Trade and industry has not finalised the regulations, which have a direct bearing on the interpretation on certain sections of the CPA concerning rental property,” says Michelle Dickens, managing director of TPN Credit Bureau.
“We are still uncertain if the rental property industry will be excluded from the CPA, and the future seems complicated.”
Marlon Shevelew of Marlon Shevelew and Associates says the South African property rental industry is already legislated by the Rental Housing Act, the Debt Collectors Act, and the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act. We also have the Unfair Practices regulations and the Rental Housing Tribunal.
“Unfortunately there is still uncertainty as to whether or not various sections of the CPA regulations that directly affect rentals have been amended. Most important to the rental industry is section 14 of the act. Here, the distinctions and duration of a residential lease as opposed to a commercial lease, tenants’ ability to cancel a lease with only 20 business days notice and the penalties facing landlords and property managers are all up in the air.”
According to Shevelew there are various different interpretations among the legal fraternity when it comes to the CPA and the rental industry.
For instance, some say that if an individual owns one property, earns a rental income and the tenant is an individual then the CPA does not apply irrespective of whether there is a rental agency involved. Others say if there is a rental income earned and declared then it is in the landlord’s ordinary course of business, irrespective of the landlord’s occupation or the fact that the tenant is an individual
A minority say if the rental income earned exceeds the landlord’s normal occupational income then it is in the landlord’s ordinary course of business, despite the landlord not being a serial property renter.
“The best advice we can offer property managers and landlords operating in the rental market is to be wary of potential consequences and hefty fines not dissimilar to those imposed by the Competition Commission. The first safe step is to make sure that all lease agreements and other key documentation is drafted in keeping with the CPA,” says Dickens.
“We don’t yet know how courts, consumer protection or rental tribunals will perceive the ordinary course of business of a person. It is best to err on the side of caution and ensure that you, as the landlord or property manager, clearly explain the act and all its applicable provisions to your tenants.”
Call Michelle Dickens on 0861 876 000 or email michelle@TPN.co.za.