Almost daily there are media warnings that the Consumer Protection Act will have consequences not previously imagined or predicted.
One such, recently pointed out by Lanice Steward, MD of Anne Porter Knight Frank, has still not been assimilated into the planning of many landlords – they are, says Steward, “blissfully unaware of it”.
The legislation to which Steward was referring stipulates that no property lease (whether for a commercial or a residential building) can be longer than 24 months if the tenant and the landlord are both non-juristic persons (i.e. are not working through a trust, close corporation or company).
The clause can also be nullified if the landlord and tenant can show that there are sound financial benefits to be gained from having a longer lease.
Similarly, the new legislation does not apply where the lessee has assets or turnover below R2 million per annum.
“The new rulings,” said Steward, “appear to be based on the principle that the individual tenant acting solely on his own behalf cannot be held responsible for future events which may be beyond his control, e.g. the
loss of a job, a decline in business or changes in this market. While this is sound thinking, it does make it difficult to plan and budget for a future property portfolio.”
A possible solution, said Steward, will be for the landlord to get hold of an inexpensive shelf company and insist that the tenant, with his help, takes it over and rents the property in its name.
A possible down-the-line benefit of this new legislation, she said, is that it may enable rent increases where possible, to be more frequent than before.
Related posts:
i have a shop for one year with a verbal lease of 800 years and the option to buy. the landlord increased the rent by 50% in two days and now wants to evict me . all rent is paid up. what do i do