Please note that this article focuses on the letting of residential property by and to individuals. It does not address commercial lease requirements.

This article includes a combination of certain regulations and common practices. The key laws/regulations that cover residential rental agreements include:
• Rental Housing Act (Act 50 of 1999)
• Consumer Protection Act

All residential leases are subject to the Rental Housing Act.
All residential leases are subject to Consumer Protection Act if the lessor leases property in its ordinary course of business and the lessee is either (i) a natural person, or (ii) a juristic person (for example a company or trust) with a turnover of less than R2 000 000.00

Before entering into a lease, both the landlord and tenant should always obtain professional advice.

A lease agreement is one where one party, called the lessor/landlord (owner of the property), shall give the use and enjoyment of the property to the other, called the lessee, in return for the payment of rent. The lessee is also normally referred to a tenant

A lease does not need to be in writing but must be reduced to writing if requested by the lessee. A lease without a written agreement involves risks as it creates uncertainty as to the parties' intention regarding key elements such as rent and lease periods etc. It is preferable to always have a written agreement.

The lease would normally include amongst other matter the following:
• Details of lessor/landlord and tenant/lessee
• Details of the leased property
• What the property may be used for
• The lessor’s/landlord obligations and rights
• The tenant/lessee’s obligations and rights
• The number of people occupying the property
• Period of the lease
• Rental amount to be paid, how often and by when
• Rental increase -how much by and when
• Interest due on late payments
• Other costs to be paid by the tenant -e.g. municipal costs
• Deposit amount
• How the deposit is invested and what it can be used for.
• Bank account details of the landlord
• Responsibility for the maintenance
• Whether pets are allowed -if so, include the conditions relating to pets
• Cancelation clause.
• A renewal clause (if applicable)
• Reference to a property letting agent (if applicable)
• House rules (if applicable)

You can access a lease template by clicking here . The document is provided in Word which allows you to modify it should you wish. You could also print it as is and fill in the sections.
Even if you don’t use the lease you should review it so that you better understand the type of content that is normally in a lease agreement. You should however always ask an attorney to check the lease and assist you in dealing with your specific requirements.

Generally, those people who are 18 years and older and are of sound mind.
The lease must be properly signed at the end, and each page should be initialled. Witnesses to the agreement are not required.

If there is more than one adult occupying the property, then the landlord may insist that more than one adult occupant sign the lease. All those who sign the lease will be jointly liable for the rental and other costs. This generally means if the one tenant who signed the lease does not have the funds to pay what is due in terms of the lease, then the other tenant(s) who signed the lease will be liable to pay.

A third party may also sign as surety to the lease or provide a guarantee, which means that the third party will likely become liable should the tenant not pay the amounts that are due. A separate surety agreement/guarantee agreement will need to be signed. The suretyship agreement should be prepared by a qualified lawyer.

Initial lease period
The maximum duration of a lease is the lifespan of the parties, however very often the lease term is between 1 and 3 years. The parties are free to choose the duration of their lease. However, should the lease period be 10 years or more it may be considered a long lease. The regulations regarding long leases are not addressed in this article and the parties should obtain assistance from an attorney should they wish to enter into a long lease.

Renewing a lease
The initial lease period is normally the period of the lease before taking into account the renewal period. A lease renewal is in simple terms when the landlord and tenant agree to continue with a letting arrangement for the same property. The lease would have a clause which deals with the renewal, in which case it is likely that it will indicate a change to the rental amount on renewal.

Many leases do not have a renewal clause in the lease in which case the parties can simply renegotiate another lease.

Before the lease is signed the property should ideally be inspected by both the tenant and landlord. The tenant and landlord may then write up a list of defects:
• assuming those defects are acceptable to the tenant, then the list can be attached as an annexure to the lease to be signed. This then ensures that when the lease expires the tenant cannot be held liable for the defects/damage on the list.
• assuming the tenant is not happy with the defects and the landlords agrees to fix all or part of the defects then the following lists are attached as an annexure to the lease:
o a list of defects to be rectified before the occupation date; and
o the list of defects not be rectified (if applicable).

Another option is that once the lease is signed the tenant and the landlord should inspect the property within 14 days of signing the lease and identify any items that need repair. The commencement date of the lease should allow enough time for the repairs to be done. For example, the commencement date could be 1 month after signature date. It would again be wise for both parties record and attach to the lease a list of defects that are not be repaired so that when the tenant moves out, he/she is not held liable for the listed defects.

It must be noted that the landlord is responsible to ensure the property must be in a reasonable condition and must comply with regulations when the tenant moves in.

The detailed list of any existing property damage and defects could include for example:
• Door- locks do they all work and are all the keys provided?
• Door- handles do all doors have them and are they in working order?
• Doors- do they shut properly, are they damaged?
• Walls- are they cracked or is the paint peeling?
• Windows- do they shut properly, are the frames worn or damaged, are the windows cracked?
• Equipment- are they in good working order, do they leak?
• Ceilings- are ceiling boards damaged and is the paint peeling?
• Cupboards- are any damaged or marked?
• Plumbing- does the toilet flush and drain correctly, are taps or pipes leaking?
• Floor- tiles are any cracked or missing?
• Carpets- are they torn, frayed, burned or stained?
• Windows- do they close properly? Are there any broken or cracked panes?

It is a good idea for both the landlord/tenant to take pictures of the inside and outside of the property at the start of the lease so they can be used to assess if there has been any damage to the property during the lease period. These pictures should also be attached to the lease.

The property may only be used for the purpose as approved by the landlord and in terms of all regulations.

House rules
A landlord may create house rules in relation to the control, management, administration, use and enjoyment of the property. The rules are only enforceable if they,
• promote the convenience, safety, health or welfare of the tenant or that of the neighbours;
• preserve the landlord’s property from abuse; or
• make a fair distribution of services and facilities available to the tenant.

The Tenant can take occupation of the property on the lease start date. (Commencement Date) provided he/she has complied with the lease.

This means that the tenant is normally only given occupation of the property if:
• this lease has been duly signed;
• the deposit has been paid in full;
• any first month’s rental has been paid
• any other amount due before the commencement date have been paid

There are many things to consider before accepting a tenant and it is important to choose a decent tenant as it is very costly if an undesirable tenant takes occupation of the property. The eviction process is not easy nor quick. An article on this topic will be available soon.

The best way to determine a fair rental is to visit various property rental websites and look at the rentals of comparable properties (location, size, condition of property etc.)

If the landlord is using a property agent, then the agent will normally be able to guide the landlord.

These amounts normally include (other items may apply as well), electricity, water sewerage, refuse, security, alarm subscriptions, DSTV, and internet access. Rates are normally paid by the landlord

The amounts are payable on demand however it is common practice for the landlord to include in the monthly invoice to the tenant, the amounts owing for the above. This means that the tenant can pay all the amounts owing at once. The tenant may request a copy of the municipal accounts in order to verify the amounts owing.

Rentals are almost always paid in advance meaning the tenant is obliged to pay the rental on or before the first day of the month. The payment also needs to be in the landlord’s bank account by that date which means the tenant may need to do the electronic transfer a day or two before the due date to allow for the banks to process the payment.

The tenant has an obligation to pay the landlord on time and in full and cannot deduct any amounts from the rental payment. The tenant is entitled to receive a receipt for each payment.

The landlord is entitled to charge interest on late payments. The rate should comply with regulations and will apply from the due date of payment to the date the rental is paid. A penalty for a late payment may not be charged.

The landlord may not take any of tenant’s possessions in order to recover any outstanding amounts unless there is a court order, which authorises this.

Landlord
It is the landlord’s responsibility to maintain the property structure and associated equipment to service the property, such as water geysers and the fixtures and fittings which belong to the house, provided the damage was not caused by the intentional actions or negligence of the tenant. For example, fixing a leaking roof or leaking toilets is the responsibility of the landlord.

Tenant
The landlord accepts fair wear and tear during the period of the lease. Fair wear and tear typically relates to the slow deterioration of the property during its normal use.
It is the tenant's responsibility to act reasonably and responsibly when using the property and could be held liable for any damage over and above general wear and tear. During the lease period the tenant is to maintain the property in a neat, tidy and safe state of repair. When leaving the property, the tenant is meant to restore the property to the state it was in when he or she received it, wear and tear accepted.

No, the tenant cannot make any alterations to the property without the authority of the landlord.
If the landlord authorises the tenant to make alterations, then all regulations (building or otherwise) must still be complied with. The tenant and landlord should also agree as to what will happen to the improvement at the end of the lease. The landlord may want the property restored to its original state at the expense of the tenant.

A landlord may insist on a deposit which is often equal to one- or two-months rental. This is normally paid when the lease is signed.

The deposit must be invested in an interest-bearing account and the interest will be for the benefit of the tenant. This means that the landlord will be able to choose the interest-bearing account and therefore control what interest rate is earned on the deposit).  If the landlord appoints an agent to manage the property then the agent will likely hold the deposit and invest it accordingly.

The landlord must put the deposit into a separate savings account in his/her name. This means that the money is not deposited into an account which has the landlord's personal savings therein. The landlord can then if requested by the tenant provide a copy of the bank statement which clearly reflects the interest and if applicable any drawings from the deposit which are allowed in terms of the lease (For example: repairing damage to the property

At the end of the lease the landlord may use the deposit and interest towards all amounts for which the tenant may be liable under the lease. This would include any rental which was not paid. The landlord must if required provide proof of any deductions. Please refer to the information below for more useful information.

The tenant may not set off against the deposit (or interest thereon), any monthly rental or other amount owed by the tenant to the landlord in terms of this Lease or otherwise. This means the tenant is always responsible to pay the landlord all amounts owing in terms of the lease (or law) even though they have paid a deposit.

When a lease is renewed it is normal practice for the deposit amount to be increased.

Joint inspection of property/Refund of deposit
The landlord and tenant must jointly inspect the property within three days before the lease expires, to ascertain if any damage/loss over and above normal wear and tear occurred.
• If during the joint inspection of the property is found to be in a  good and proper state, then the balance of the deposit must be paid to the tenant within 7 days provided that there are no other amounts owing to the landlord in terms of the lease.
• Should the landlord choose not to inspect the property together with the tenant within the required three days then he/she is believed to have accepted the condition of the property and will not be able to make any claim against the tenant for any damages to the property.
• If the tenant refuses to meet the landlord to inspect the property within the three days, the landlord must then inspect the property within seven days after the expiry of the lease.
o If there are any damages to the property or items missing the landlord is entitled to claim for these in terms of the lease and use the deposit and interest thereon to pay for these damages/items. The balance of the deposit (if any) must then be paid to the tenant within 14 days after the repairs are complete, however if the cost of the damage exceeds the deposit and interest then the landlord will claim this additional cost from the tenant.
o If there are no damages to the property, then the landlord must refund the tenant within 21 days from expiry of the lease

Please refer to the information above which deals with inspection of the property when the lease is entered into, as it refers to a defect list and pictures which were attached to the lease and which provide evidence of the state of the property at the start of the lease

Generally, no, even if the rent has not been paid on time the landlord cannot simply lock the tenant out. If however the tenant has breached the agreement and the Landlord has taken the appropriate legal steps then the landlord may deny access to the property

Generally, no, as the landlord will need to arrange to visit the property and have a valid reason. The tenant cannot deny access should the landlord wish to inspect the property from time to time. If however the tenant abandons the property then the landlord may access the property.

Although the landlord cannot access the property at any time,  what happens when there is an emergency for example the tenant is away?  The house may be flooding or some other emergency may occur. It may be a good idea to address in the lease, the access to the property in the case of an emergency.

Yes, the Consumer Protection Act allows the tenant to provide the landlord with 20 days written notice to terminate the lease. The tenant will however be held liable for various cancellation related costs and/or certain rentals. This is only fair as the landlord will need to re-let the property which will take time.

The lease should have a cancellation clause which stipulates what happens when the tenant provides the landlord with notice of cancellation. This is recommended as it clarifies the situation. For example
• the landlord may charge the tenant a penalty of two months rental, and
• the letting agent will charge a penalty equal to the amount of commission the agent would have made had the lease continued until it's expiry date. (if applicable)
If there is no such clause in the lease, then the tenant and landlord would need to negotiate a penalty which could turn out to be difficult.

If the tenant vacates the property during the lease term, then the lease is deemed to have expired on the date that the landlord finds this out. The landlord’s rights in terms of law and in terms of the lease will still apply. This means the landlord will be able to claim losses from the tenant.

If after the expiry of the written lease the tenant simply remains in the property and both parties continue to operate in terms of the lease without discussing any renewal terms, the position, by operation of law is as that the lease will continue to run on the same terms and conditions as contained in the written document, except that the duration of the lease will be only one month (i.e. a month to month lease situation will arise). In this situation either party can terminate the lease by giving the other party one calendar months’ notice.

The landlord and tenant could also simply enter into a new lease and may decide to use the same lease terms and conditions as set out in the previous lease, except for the commencement and expiry dates (and possibly the rental and deposit amounts) which will need changing.

Subletting means that the original tenant lets out the property to a third party. In other words, the original tenant now collects rent from a third party (new tenant).

The tenant is not allowed to sublet the property, unless the landlord agrees thereto, however the approval of the landlord cannot be unreasonably withheld. The landlord should not ideally try to avoid subletting as it creates many potential problems, and the landlord could be a risk. For example, the lease agreement between the original tenant and new tenant may not be appropriate. The landlord should rather enter into a new lease agreement with the proposed new tenant, after the usual tenant vetting process is complete.

The tenant may have pets only with the landlord’s agreement. This management of pets should be set out in the lease agreement including the specific requirements about the keeping the pet. The tenant will be liable to repair any damage to the property made by the pet.
If the property is part of a body corporate or other estate, there will likely be rules regarding pets which often include a rule that provides the body corporate with the authority to decide if pets are allowed on the property. Be sure to get this approval first before signing the lease.

Landlord
The landlord is normally responsible to insure the property including its fixtures and fittings. The landlord will likely want to have third party insurance to cover potential damage/injury to the tenant or the tenant’s belongings.

Tenant
The tenant will not have to take out household insurance. If the tenant is negligent or wilfully damages the property he/she may be liable for damages to the property. The tenant may wish to take out, if possible, insurance to cover any damage to the property, for which the tenant may be liable. The tenant should contact an insurance broker to obtain further advice on how to reduce his/her risks.

The tenant is responsible for his/her house contents and may wish to insure these.

The following matters should be considered if the tenant wishes to work from the property
General matters to consider:
• Safety
• Number of employees to be on the property
• Parking for customers
• Noise
• Potential damage to property
• Working hours

Municipal laws or other laws to be considered:
• the zoning of the property and
• whether or not the landlord has approval to run a business from the property

Lease terms and conditions
• The landlord may or may not allow the tenant to work from home,
• If the landlord allows the tenant to work from the property, then the conditions/rules of working from home should be included in the lease.

Body corporate or other ownership structure
• If the property is part of a body corporate or estate, then the relevant rules will also need to be complied with. These rules should be checked before any lease is signed.
• Approval from the body corporate/ governing body may be required in terms of the rules.

Yes, a landlord will need to include in his/her taxable income the property related income. The landlord is however allowed to claim certain deductions against the income.
If the landlord is using a letting agent to manage the property, the agent may be required to report to SARS the landlord’s details and the annual rental income earned by the landlord.

If the landlord is an individual and rents out residential property, he/she will not charge VAT on the rental charged, unless they are running a commercial business such as a hotel, B&B etc.

There may well be income tax implications for the landlord if the tenant improves the property at his/her expense as the landlord receives a benefit from such improvement, for example the property value may increase.

Please always obtain tax advice from a tax practitioner.

Generally, no, the rent paid on a private home is not tax deductible.
If the tenant however uses part of the home for business use, then part of the rental paid together with certain other costs may be tax deductible. If this is the case, the tenant should obtain professional tax advice before completing his/her tax return.

Yes, the landlord may sell the property, and the lease will normally be ceded to the new owner which in simple terms means that the tenant will simply have a new landlord and will pay the rent and other amounts due to the new landlord. The tenants deposit will also be transferred to the new landlord unless of course the letting agent holds the deposit.

The tenant is expected to act reasonably and allow potential buyers access to the property in order to view the property.

If the tenant enters into a lease and the property leasing arrangement is managed by the letting agent appointed by the landlord then the letting agent will likely be able to report the tenant’s payment behaviour to a credit bureau, so this is another reason for the tenant to remain up to date with all payments.

The following methods could be used to resolve a dispute
• Contact an attorney for guidance or
• Contact the Rental Housing Tribunal to see if they could assist
The housing tribunal is a free service set up by the government that assists tenants and landlords in managing disputes. It allows you to represent yourself which saves you costs. Each province has a tribunal which can be contacted.
Please keep in mind the lease may well likely have a dispute resolution clause the terms of which will need to be complied with. 

Please refer to the article regarding the use of letting agents for more useful information.