TENANTS AND LANDLORDS MUST TALK
When the clock struck midnight on March 26, signalling the start of the national lock-down, it effectively pressed pause on the plans of many tenants and landlords.
Some landlords are sitting with empty properties instead of welcoming new tenants, many people are living out of boxes in homes that are no longer theirs, and who is supposed to pay rent to whom is not always clear.
For many tenants who were not able to move before lock down, the first month’s rent already had been paid to the new landlord, so they have no money to pay the rent on their current (old) properties. Many people have questions about the situation, but there are often no clear-cut answers.
Common sense and understanding must be applied in a situation no one has been in before. Communication is vital amid the confusion, says Andrew Schaefer, managing director of letting agency Trafalgar. Different options are available for different landlord and tenants relationships.
“If they are quality tenants, who have always paid their rent in full and on time, we suggest they be asked to sign a waiver to the effect that their deposit may be used as rent for a certain period instead of it being held in trust.” If such an agreement is made, it should be drawn up by a professional rental agent and contain a provision that the deposit is to be reinstated, perhaps in installments, by a certain date, and that the landlord will be able take legal action if the tenant reneges on this arrangement, Schaefer says.
Alternatively, landlords can decide to give good tenants a “payment holiday” during the lock down, or even for the next few months, especially if they have been given similar financial relief by their bank on their bond installments.
“The banks are currently working on plans to suspend certain loan payments during the lock down.” Schaefer emphasizes, however, that a written agreement needs to provide for landlords to withdraw the relief under certain circumstances, reinstate the unpaid rent before the end of the lease, and for them to be able to take legal action if the tenant reneges on the special arrangement.
When it comes to tenants who had been given notice to move because they were already defaulting on their rent, Schaefer says landlords are now obliged to let them stay on at least until the end of the lock down period. “However, if they again don’t pay rent, it is important that the landlord or rental agent keep reporting this to the credit bureaus and continue to follow the correct legal procedures so the eviction process can begin promptly after the Covid-19 lock down is lifted,” he says. Both tenants and landlords are under “enormous pressure”, says Michelle Dickens, managing director of TPN Credit Bureau.
The organisation’s Rental Recovery Pack, which contains documents to assist tenants who have a history of paying their rent on time and in full but now have their earnings at risk, had 11 000 downloads in just over a week.
“The overwhelming feedback we have received from the industry indicates that tenants are not able to keep up with their rental payments due to temporary unpaid leave, retrenchment and lack of earning in terms of commission or where businesses have closed.”
Dickens says this time will pass and echoes Schaefer when saying landlords with very good tenants might be wise to mitigate their damages as far as possible instead of getting rid of those tenants.
“In the end, we have to get through this time together, and minimizing the damage we suffer is often best achieved through negotiation in a way that is mindful of the greater good of all.”
SOURCE :Property 360 -7 April 2020