The Threat Of Unlawfull Tenant Occupation
Residential rental property is regarded as the best form of investment in wealth creation. One of the major keys to succeed in wealth creation through property is proper rental management, combined with addressing the risk brought along with tenants.
The widely debated interpretation of the PREVENTION OF ILLEGAL EVICTION FROM AND UNLAWFUL OCCUPATION OF LAND ACT, 1998 (PIE ACT) lead to a situation where the rights of tenants who are refusing to evict on termination or on defaulting of a lease agreement, are favoured against the rights of landlords. The interpretation of the act, which was intended to regulate the eviction of occupants of vacant land, lead to a lengthy and costly procedure to protect the rights of landlords in the case of defaulting tenants.
It seems as if the act is protecting the rights of tenants, not considering the rights and obligations of the landlords. The landlord has to service the bond and he is liable to all costs incurred in regards of the property at the local authority, such as property rates and municipal services. The landlord is further responsible for the levies to the body corporate, should it be a sectional title property development.
It is thus imperative to address the risk brought about by tenants.
The first step would be to do a proper screening of tenants. TENANT PROFILE NETWORK (TPN) developed a very effective tenant screening system. TPN provide for credit checks of tenants and they are keeping a database of the payment patterns of tenants.
The second step is to insure the risk brought about by tenants. Hollard insurance is underwriting a short term insurance product called TENRISK. In short, Tenrisk will, as part of the insurance cover;
· Handle the legal process in evicting tenants with cost up to a pre determined maximum level.
· Pay interim rent while the eviction is in progress.
Though the PIE act could be regarded as unfair to landlords, the whole risk issue brought about by tenants could be properly managed by addressing the issues through the right structures.
Residential rental property is regarded as the best form of investment in wealth creation. One of the major keys to succeed in wealth creation through property is proper rental management, combined with addressing the risk brought along with tenants.
The widely debated interpretation of the PREVENTION OF ILLEGAL EVICTION FROM AND UNLAWFUL OCCUPATION OF LAND ACT, 1998 (PIE ACT) lead to a situation where the rights of tenants who are refusing to evict on termination or on defaulting of a lease agreement, are favoured against the rights of landlords. The interpretation of the act, which was intended to regulate the eviction of occupants of vacant land, lead to a lengthy and costly procedure to protect the rights of landlords in the case of defaulting tenants.
It seems as if the act is protecting the rights of tenants, not considering the rights and obligations of the landlords. The landlord has to service the bond and he is liable to all costs incurred in regards of the property at the local authority, such as property rates and municipal services. The landlord is further responsible for the levies to the body corporate, should it be a sectional title property development.
It is thus imperative to address the risk brought about by tenants.
The first step would be to do a proper screening of tenants. TENANT PROFILE NETWORK (TPN) developed a very effective tenant screening system. TPN provide for credit checks of tenants and they are keeping a database of the payment patterns of tenants.
The second step is to insure the risk brought about by tenants. Hollard insurance is underwriting a short term insurance product called TENRISK. In short, Tenrisk will, as part of the insurance cover;
· Handle the legal process in evicting tenants with cost up to a pre determined maximum level.
· Pay interim rent while the eviction is in progress.
Though the PIE act could be regarded as unfair to landlords, the whole risk issue brought about by tenants could be properly managed by addressing the issues through the right structures.
