If you’re thinking about letting your property to one of the hundreds of people who will be flocking to Cape Town for the December holidays then you should know what’s involved.
Michelle Dickens, managing director of Tenant Profile Network (TPN) credit bureau, said letting out your property over the holidays is the same as letting it out long-term.
“You are going to go through the same processes as you would with pre-vetting a tenant so that you know their background and if they have had any issues in the past. You will also have to get a deposit to secure the property because if the tenant doesn’t arrive you lose that income.
“A holiday let is a wonderful opportunity to charge a premium rate, certainly in the coastal towns, and get a higher monthly income than you would during the rest of the year,” she said.
The agreement can be verbal but you will be better protected with a written contract. However, you will have to have an incoming and exit inspection with the tenant and refund the deposit when they move out.
According to TPN, the Rental Housing Act regulates all property leases from long-term lets to short-term holiday leasing and the act says it can be verbal but you would have to both agree on the conditions: the length of the stay; the rent; and the term of the lease. A written agreement is always better so there is protection for the landlord and the tenant.
“If an incoming and outgoing inspection is not performed, the deposit cannot be used for any damages and with a holiday let, the property is furnished, so the chance of damage is higher.
“Even though there are certain terms in the act that will protect you regardless of whether your agreement is in writing or not, as a landlord, you still want to protect yourself properly,” Ms Dickens explained.
If you are a landlord you can list your property on any listing portal, but TPN will do a credit check on your tenant (with their permission), provide a holiday lease agreement that you can download and if your tenant does damage the property or there is a default at the end of the lease, TPN will record it for you on the credit bureau database.
“Sometimes it’s better to leave it to the professionals,” Ms Dickens said.
“People often let their own holiday home, usually your second property, in a different city or province. If that is the case, it makes more sense to have a rental agent to manage it for you.
“It is not uncommon for people to let out their primary residence to holiday makers. I recently visited Cape Town for 10 days and chose to Airbnb it. I stayed on the property where the landlord was on the top floor and I was on the bottom floor. So, it made perfect sense,” she said.
If you are the landlord and you are renting out your own property you don’t have to seek permission from a local authority. Body corporates are beginning to feel uncomfortable with the movement of holiday letting, especially in the coastal towns. However, if your body corporate rules do not make provision or prevent you from renting out your property then no, you don’t need to seek permission from anybody else.
Ms Dickens said it was important to have a well-drafted lease.
If you later find out your tenant is involved in criminal activity it is the landlord’s responsibility about what happens on his property, so a lease should have a clause to allow for immediate cancellation. The same applies to sectional title. If your tenants are not adhering to the body corporate rules or they have damaged the common areas, the body corporate might fine you as the landlord, not the tenant. Unless your lease agreement allows you to pass those fines on to your tenants, short-term or long-term, you will have to pay the bill which will arrive with your levy statement.
“Usually, in short-term lets you don’t include charges for water, sewerage or electricity or DStv, which are usually applied to longer stays, so you might overlook the possibility of a fine which is why there should be a clause in the lease.
“You can factor in the consumption costs of water and electricity for holiday lets but fines are another issue, and if your tenant is a party animal those fines can build up. Unless you have provided for it in your lease you won’t be able to pass the costs on to your tenant,” Ms Dickens said.
TPN’s business is profiling tenants, understanding their behaviour and if they’re a poor credit risk, for example, and TPN can mediate if there’s a dispute.
The tenant, however, also has recourse to the Rental Housing Tribunal, the Credit Ombudsman and the National Credit Regulator, if they are not happy with TPN’s findings that may have an adverse listing at the credit bureau.
The application process is regulated by the FICA Act and would-be tenants are required to provide their ID or passport number, their full name, current home address and documentation which includes a utility bill and a SARS tax reference number, and if you want to do a credit check you have to first get the tenant’s permission.
“Identity theft is rife,” Ms Dickens said. “On our database, we had 33 applications in one month for rental by people who were deceased.”
It seems as if the whole of Johannesburg descends on the coast, rather than heading overseas, which is why there is so much activity in the Cape at holiday time.
“Many people are ‘Airbnbing’ or putting their properties up for rent over the holidays and there are a lot of different portals for this, TPN has RentBay which is a free rental listing website.”
Visit www.tpn.co.za or email firstname.lastname@example.org or call 0861 876 000 or fax 0861 876 329.