The amendments to the rental housing Act: “Greater security in the Renters market”
The relationship between landlord and tenant is one that has been deeply entrenched in our law for many years. Before the 1994 Constitution, the law has been quite onerous in regulating the relationship and enforcing rent control legislation to moderate the common law powers bestowed on landlords. For example, in the wake of accommodation shortages during World War I, the legislature enacted the Tenants Protection Act 7 of 1920 and the Rents Act 13 of 1920 which provided that as long as a lessee paid the rent due, even if the rent was unreasonably low, they could not be ejected from the premises.
Fast forward to 2019 and in the current legislative environment, changes are still being effected to this relationship. Recently, the legislature effected further changes to the Rental Housing Amendment Act 35 of 2014 (“the Act”), which is to come into operation on a date to be promulgated by the President.
The Rental Housing Act 50 of 1999 is the principal legislation governing rental housing and defines what the obligations are between landlord and tenant respectively. It also illustrates what the key responsibilities are for government in this regard. These responsibilities, amongst others, include the promotion of a stable market for affordable rental housing, as it was recognised that rent control inhibited market mechanisms that incentivise investors to contribute to the rental market. The cascading effect is that it encourages investment in urban and rural areas that are in need of revitalisation, corrects distorted patterns of residential settlement and facilitates the development of affordable housing between public-private partnerships.
The Act aims to substitute certain definitions to coherently take account for the rights afforded to parties in the rental market. It has done so with the insertion of section 4A and 4B, which sets out the rights and obligations between the landlord and the tenant. Some of the pertinent inclusions would be that a tenant, in terms of section 4A(2), may now request from a landlord during the period of their occupancy to provide him with written proof of the interest accrued on the amount deposited by the tenant into an interest bearing account by the landlord. Further, section 4A(5) states that a tenant has a right to privacy should the landlord wish to exercise his right to inspection. The inspection must be done in a reasonable manner after reasonable notice to the tenant has been given.
The provisions pertaining to lease agreements have also been amended, in terms of section 5 of the Act, which previously recognised that oral agreements could be entered into between parties and that a landlord would only be subject to providing a written agreement if it was requested by the tenant. The amendments have now made it compulsory for lease agreements between the landlord and tenant to be reduced to writing and legally enforceable in a Tribunal or competent court.
With this in mind the Act has extended the application of Chapter 4 to all Provinces. It specifically, states in section 7 that every MEC must within the first financial year following the commencement of the Act, by notice in the Gazette, establish a Tribunal in the Province to be known as the ‘Rental Housing Tribunal’. What should be noted is that the amendments seek to:
extend the powers of the Rental Housing Tribunals;
provide for an appeal process;
require all local municipalities to have Rental Housing Information Offices;
provide for norms and standards related to rental housing; and
extend the current offences.
In the case of Maphango and Others v Aengus Lifestyle Properties (Pty) Ltd (Inner City Resources centre as Amicus Curiae) 2012 (3) SA 531 (CC), the tenants of Lowliebenhof flats in Braamfontein were subjected to rental increases following the gentrification of the building by a new developer. The developer held that since the existing leases did not allow it to increase the rent unilaterally, it was entitled to use the termination clause to oblige the tenants either to leave or enter into new lease agreements. On the other hand, the tenants argued that the law did not permit the landlord to use the bare power of termination for this purpose. However, in the High Court and the Supreme Court of Appeal the matter turned largely on the Constitution, contract law and public policy and the tenants were unsuccessful in this regard.
Justice Cameron insisted that the Act offers an appropriate and fair mechanism to resolve disputes and that it should be utilised before proceeding to any other competent body. The court reiterated that the Tribunal has the power to rule that a landlord’s actions constitute an unfair practice, even though a termination may be permitted in terms of the laws of contract and the common law. The effect of this provision is that contractually negotiated lease provisions are now subordinate to the Tribunal’s power and lease contracts and the exercise of contractual rights are subjected to the scrutiny of unfairness in light of both parties’ rights and interests.
Furthermore, the Gauteng Unfair Practices Regulations provide that a landlord must not engage in oppressive or unreasonable conduct, which must be read in light of the power to prescribe as unfair a practice that unreasonably prejudices a landlord’s or tenant’s rights or interests.
In these current economic times, where the number of buyers in the property market is decreasing, investors are geared towards realising their assets in the rental market. Therefore, it would be prudent for all individuals to grow and become aware of these changes in our law governing the relationship between landlord and tenant.