Lockdown for landlords, your questions answered
We are in an unprecedented situation with our country never before being placed in a national lockdown. Understandably, landlords and property practitioners have very important questions that need to be answered on what this means for the rental industry during the next 21 days and beyond. TPN and SSLR Inc. put our heads together to answer your most pressing questions:
Question #1: What happens to tenants who need to move on the 1st of April?
This has been the most frequently asked question since lockdown was announced by the President last night. The reality is that nobody is moving during a nationwide lockdown. It would be contradictory to the Disaster Management Act and therefore illegal to do so.
Only essential services on the list published by the Government may operate for 21 days from 23:59 on Thursday, 26 March. This list does not include estate agents or moving companies.
TPN has developed the Rental Recovery Pack, together with SSLR Incorporated Inc. and Fullard Mayor Morrison Inc., to help our residential and commercial landlords get through the National State of Disaster period. The pack is available at no cost and can be downloaded from the TPN Shop where we specifically recommend signing the Month-to-Month Addendum of Lease.
For instructions on how to use the Rental Recovery Pack, please watch our TPN YouTube video.
Question #2: How do I handle In-coming and Out-going inspections?
According to the Rental Housing Act, out-going inspections must be performed within 3 days of the tenant vacating the premises. As you are not allowed to leave your house, it will be impossible to perform an out-going inspection. Similarly, as nobody will be able to move out and with nobody moving in, there will be no need for an in-coming inspection to be performed during lockdown.
Question #3: What happens to an Eviction Order now?
An Eviction Order that was granted before the lockdown can’t currently be enforced as Sheriffs will in all likelihood not be working. In an instance where you are busy with an Eviction, always deal directly with the attorney that handled the matter.
It is extremely important that tenants who have not paid their rent are placed on terms and that the necessary Letter of Demand has been sent so that you can act immediately after the lockdown has been lifted. The TPN Letter of Demand has been discounted by 50% during the time that we are in a National State of Disaster.
Question #4: Can the tenant cancel their lease agreement in the usual way?
The tenant still has the right to cancel the lease agreement by giving 20 business days’ notice. The landlord’s right to charge an early cancellation penalty remains in force and should the landlord suffer damages as they are not able to find a replacement tenant due to the lockdown, the landlord would still be able to charge loss of rental as part of these damages.
It is unclear in law at the moment as to whether the days during the lockdown can be counted as business days. Until there is a directive which will come from the Judge President, we have to treat business days as business days in which case, the tenant would be entitled to cancel the lease but not be entitled to vacate until after the lockdown.
Question #5: I have a vacant property, can I charge my new tenant rent from the 1st of April even though they can’t move in?
We find ourselves in extraneous circumstances. Where the tenant is not physically able to move in during a national lockdown, the landlord would have no claim against the tenant for rent due during the lockdown. The situation is as a result of a force that is outside of either the tenant or the landlord’s control.
Question #6: Does my tenant have to pay rent?
There is a falsified document said to have been issued by the Department of Health doing the rounds on social media. It claims that ‘Health Minister Zweli Mkhize has barred landlords from collecting rent money from their tenants for the next 90 days’. This is fake news which has been verified as such in an article by News 24 with comment received from the Department of Health spokesperson, Lwazi Manzi.
Tenants are still bound by their rental agreement. Should a tenant have difficulty in paying their rent due to the COVID-19 pandemic, we strongly suggest that you make use of the free TPN Rental Recovery Pack to negotiate the best possible out-come.
Conclusion
It is important to remember that this time will pass. Where you have a very good tenant, it might be wise to mitigate your damages as far as possible rather than getting rid of that tenant. In the end, we have to get through this time together and minimising the damages we suffer is often best achieved through negotiation in a way that is mindful of the greater good of all.
TPN will be operating in full but remotely. This is the perfect opportunity to sit down and create new opportunities. This is when innovation happens, when people become amazing - the time will pass whether we use it productively or not, so let’s step out of it better, together!
Please join Michelle Dickens, MD of TPN and Cilna Steyn, MD of SSLR Inc. at 1pm for the SAPIN Live Online Discussion: Disaster Management: Tenants + Corona Virus.