- Screen the tenant
- Financial & legal checks
- Monies to be paid
Rental properties are great investments but once you have found tenants to occupy the home, it could go one of two ways: it could either be your worst nightmare, or it can be an extremely pleasant experience.
It pretty much all depends on how you approach the tenants, the screening process, and the managerial role that is played during the occupancy.
It is advisable for owners, especially first time landlords, to make use of a reputable managing agency. The agent will be responsible for collecting rent, levies, and completing other day-to-day tasks that you don’t have to worry about.
Screen the tenant
If a tenant shows interest in the rental property, it is of vital importance that they undergo a screening process.
This will allow the landlord to determine whether they are financially successful and whether they qualify to afford the rental payments every month. It will also give the landlord a good idea of the type of tenants they will be.
There is a simple procedure to be followed in this case: the lessee should complete an application form, provide you as the landlord with 3 months’ bank statements and pay slips, a copy of their ID, and proof of residence. If the latter is difficult to acquire, then a copy of the current lease agreement.
Financial & legal checks
After these documents have been received, a credit check is done on the prospective tenant. The application form should have a section that notifies the tenant of this and allows them to give consent.
Credit checks may not be done without the consent of a tenant, so it is imperative that the tenant is aware of this and that they sign as proof that they have been made aware of the process.
A lease agreement can be negotiated in the name of one or more applicants should be monthly income not suffice. All applicants will have to fulfil the same requirements and undergo the same credit checks.
If the tenant is on ITC relating to defaulting from previous contracts, bond defaults, or any other major outstanding debts, it is strongly recommended that the application is declined.
A tenant should ensure that his or her credit score is clear and has received the green light before signing a new rental agreement. Taking in a tenant with a poor credit score will only backfire on the landlord in the long run.
Monies to be paid
If the tenant does qualify to rent the unit, the tenant is required to pay a deposit (usually the amount of rent per month), one month’s rent in advance, and a lease fee to the agency.
The deposit and the rent will be paid over to the landlord (minus costs). The commission charged by the agent will be determined by their agency. The lease agreement that is drawn up must be in terms of the Consumer Protection Act. One of the main requirements of the CPA is that the agreement is drawn up in a language that is easy to understand and one that leaves no room for speculation or assumption.
There are a few things that should be taken into account before the landlord makes the final decision: Firstly, it is very difficult to evict a tenant since the implementation of the PIE Act (Prevention of Illegal Eviction from Unlawful Occupation of Land). Furthermore, the lease agreement should also be entered in the name of an individual and not a company.
The lessor must then sign a mandate with the property details, as well as confirmation that a fee is paid to the rental agency. The lessor should ensure that the agent has their Fidelity Fund Certificate to ensure that they are certified to practice.