What you should consider when renting out your property, according to Engel & Vӧlkers Waterkloof rentals.
The renting out of one’s property could be a nightmare or a worthwhile and pleasant experience. It is strongly recommended that a lessor considers the services of a reputable and trustworthy agency to procure a suitable tenant and, in some instances, manage the property on behalf of the lessor.
It is critical that the tenant qualifies to rent the property. The following procedure should be followed in order to qualify the tenant:
The lessee should:
• Complete an application form
• Provide you with 3 months’ salary slips/3 months bank statements
• Copy of ID
• Proof of residence (isn’t this a bit difficult if you are looking to rent?) (or copy of current lease agreement)
A credit check is carried out on the tenant. The application form has a section wherein the tenant will give consent for this check to be carried out. Credit checks may not be done without the consent of the tenant. The monthly rental should not exceed one third of the gross monthly income. A lease agreement could be negotiated in the name of 1 or more applicants should the monthly income not suffice. All the applicants will have to fulfil the same requirements. It is strongly recommended that, should the prospective tenant be on ITC for any default judgements relating to previous rental contracts, bond defaults or any major outstanding debts, that the application be declined.
Should the tenant qualify to rent the property, the tenant will be required to pay the 1st months rental, a deposit (normally in the amount of the monthly rental or an amount required by the lessor), and a lease fee to the agency. The deposit and 1st month’s rental will be paid over to the lessor. The agency will charge a commission fee that is determined by the agency. The lease agreement must be in terms of the CPA. One of the requirements of the CPA is that it must be in a simplistic language form and that the terms and conditions fulfil the CPA requirements.
The following should also be taken into account:
• It is extremely difficult to evict a tenant since the implementation of the PIE Act (“Prevention of Illegal Eviction From and Unlawful Occupation of Land Act”).
• It is not recommend that a lease agreement be entered into in the name of a company. A lease must preferably be in the name of a private individual/s. If the monthly rental is paid by the company, a letter on a company letterhead indicating that the company will be responsible for payment of the monthly rental, must be provided to the lessor.
The lessor will be obliged to sign a Mandate with the rental agency wherein the property details will be completed and as well as an undertaking by the lessor to pay the negotiated commission to the rental agent. The Mandate may only be signed by a full status Estate Agent. The lessor is entitled to request proof of the Fidelity Fund certificate to establish that the agent is qualified. The lessor must be the registered owner of the property and also provide the agent with a copy of his/her ID and proof of address. If the property is in the name of a registered company or cc the supporting documents must accompany the signed mandate.
This article “What You Should Consider When Renting Out Your Property” was issued by Engel & Vӧlkers Waterkloof.