What to do if tenants do not pay their rent

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Before it's too late.

Gareth Shepperson


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What to do if tenants do not pay their rent

If a landlord finds himself in a situation where a tenant is not paying his rent, then it is best to initiate legal action as soon as possible to avoid months of lost income in rent, says Michael Bauer, general manager of IHFM, the property management company.

This, however, does have its pitfalls and can take a long time to process, but there are few things that have to be remembered so as to follow the correct procedures and "do things by the book".

A summons will have to be issued, stating the claim for the rent that is outstanding and it is issued via the court by a sheriff. There are, however, two types of summons that the landlord could have served on the tenant: an ordinary summons or a rent interdict.

If the landlord finds that the tenant ignores the summons, he can within ten days of it being delivered apply for a default judgement against the tenant, followed by an Ejectment Order to evict the tenant.

This might be defended by the tenant, so it is best to be sure that the summons is justified. If the landlord owes money to the tenant (perhaps he had paid for repairs that the landlord did not carry out and is waiting for the landlord to refund him) or if a complaint has been lodged with the Rental Housing Tribunal and the complaint relates to repairs that have been requested but not done - in which case the complaint is unfair practice on the landlord's part.

"Tenants cannot just withhold their rent without going through the necessary steps to get the action they need from their landlord," said Bauer.

Once the Rental Housing Tribunal is engaged both landlords and tenants must remember that a subpoena to a hearing from them is as important as a summons from the court and must be acted on. If this is ignored it can be at the risk of a default judgement or contempt of court charge.

Another thing to remember is that a ruling from the Tribunal is equal to a magistrate's court ruling and that prosecution can follow if the subpoena is ignored.

IFHM Press Release

Be vigilant when signing contracts and making changes

Buying or Selling your residence is probably the BIGGEST investment that an individual will make during his/her lifetime.

However ... ASTONISHINGLY ... the vast majority of people "blunder" through the whole process with no legal representation or inadequate legal representation.

Please use an attorney specialising in property law to assist you.  Although the Seller is customarily the party who appoints the Transferring Attorney, the parties often simply rely on an attorney appointed by the Estate Agent, Bank or anyone willing to give his two cents worth.  Do some research and make sure that the firm is a reputable property specialist.  If the other party appoints the Transfer Attorney, then at the very least ask your own attorney to look at anything you are asked to sign ... especially the Offer to Purchase.

The cost of approaching your attorney pales into insignificance when compared with the cost of not doing so!

Gareth Shepperson


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Be vigilant when signing contracts and making changes : Property News from IOLProperty

Residential property stock tightens while sellers cut prices, wait longer

Residential property stock tightens while sellers cut prices, wait longer

Signals in the residential property market about a recovery are mixed.

The estimated average time a house remains on the market before being sold and the estimated percentage of sellers who had to reduce their asking price to conclude a sale both increased in the first quarter of this year from the previous quarter, according to the latest FNB property barometer.

But the barometer, based on a national survey of estate agents, also indicated that there had been a noticeable increase in both residential demand and in housing stock supply constraints.

Simplistically, a growing supply constraint could be expected to cause a renewed drop in average time on the market and stronger house price growth in the coming quarters if solid demand levels were maintained, FNB household and consumer sector strategist John Loos said.

He said a possible explanation for the apparent contradiction was that the short weak economic period late last year might have caused the average time a property remained on the market to lengthen with a lag. It was possible that seller optimism regarding market conditions had also improved, thereby sustaining unrealistic asking prices, he said.

The average time a property was on the market before being sold rose to 17 weeks and two days in the first quarter of this year from 15 weeks and four days in the previous quarter.

The proportion of properties sold at less than the asking price increased to 89 percent from 85 percent in the fourth quarter. The average cut in price was about 10 percent, the same as the past four quarters.

The residential demand activity indicator rose from 5.89 on a 10-point scale in the fourth quarter to 6.57 in the first quarter. This is the highest level since the first quarter of 2007.

The percentage of agents citing stock constraints as an issue increased to 23 percent in the first quarter from 13 percent in the previous quarter.

Loos said the fluctuating average time a property was on the market before being sold remained lengthy and was probably indicative that the market was not yet conducive to sustained real house price growth.

The percentage of homeowners selling to downscale because of financial pressure dropped to 15 percent in the first quarter from 18 percent in the previous quarter. The percentage of homeowners selling to upgrade rose to 16 percent from 14 percent in the same period.

Loos said this was the first time since this question was introduced to the survey in 2007 that the upgrading percentage was estimated to be higher than the “financial pressure-related downscaling” percentage.

Ewald Kellerman, the head of sales at FNB Home Loans, said the portion of the bank’s customers who were at least one month ahead of schedule in the repayment of their home loans had stabilised at 20 percent at the end of last year from a low of 12.2 percent in the second quarter of 2008.

Only 5 percent of agents surveyed expected demand to deteriorate in the next three months, with 65 percent anticipating demand to remain the same and 30 percent expecting an improvement.

Business Report

Standard Bank reports high demand for affordable housing

Standard Bank reports high demand for affordable housing

Standard Bank has made significant inroads into the affordable housing market since its entrance five years ago and now finances one in three properties in this market.

The bank's affordable housing loan book grew 30 percent last year to a record R14 billion.

Nicholas Nkosi, the head of affordable housing at Standard Bank, said yesterday that the bank's experience was also an indication that demand in this segment of the housing market had remained resilient despite weak economic conditions.

"There is still high demand for affordable housing. Standard Bank also expects to attract more prospective home buyers who are seeking to move out of the rental market and become home owners," he said.

Nkosi said Standard Bank was quite comfortable with the performance of its affordable housing loan book but declined to provide any information about the percentage of mortgage bonds in arrears or the percentage of foreclosures in the past year.

"We have not seen any different trends from our normal [home loan] book. That speaks to the affordable housing market and people in this market prioritising their bond repayments," he said.

Nkosi added that repayment arrears and foreclosures were primarily caused by "life events", with something happening that led to the homeowner being unable to pay their bonds.

He said the price range of affordable housing financed by Standard Bank was homes between a minimum of R100 000 and R550 000 that were sold to households with a monthly income of up to R18 000.

Thabani Ndwandwe, the head of credit management for inclusive banking at Standard Bank, said more than R2bn or almost 80 percent of the loans granted last year were disbursed to first-time buyers.

Ndwandwe said the income band distribution of the loans granted showed it was not just financing the upper end of the affordable housing market but continued to increase access to home ownership for customers in the low-income segment.

Nkosi said Standard Bank had in the past five years helped more than 80 000 customers to buy homes in the affordable housing category.

He said the average size loan granted by Standard Bank was R350 000 and increasingly more people were putting down deposits when they purchased a home, which dispelled some of the notions about consumers not saving.

Nkosi attributed the strong growth in its affordable housing loan book to it having a very targeted affordable housing strategy and the strength of this market but he stressed that Standard Bank continued to be the country's largest residential mortgage lender and its overall loan book continued to grow last year.

He said the Basel 3 regulatory capital requirements on banks were being introduced in a phased basis with some already in effect, which would result in increased interest rates on loans.

But Nkosi did not anticipate a material change in the interest rates payable on loans into the affordable housing market.

Business Report

'Demand for properties on the rise' - FNB

'Demand for properties on the rise' - FNB


Demand for residential property increased in the first quarter of 2013, according to the FNB Estate Agent Survey released on Tuesday.

The indicator for demand in the survey rose from the previous 5.89 to 6.57, FNB household and consumer strategist John Loos said.

"This is the highest level since the first quarter of 2007, which was just prior the big slump in the residential property market," he said.

On seasonally adjusted data, the demand rating also rose from a previous quarter's six to 6.26 in the first quarter of 2013, the highest level since the first quarter of 2007.

"So the rise was more than just seasonal factors, it would appear," Loos said.

The FNB Estate Agent Survey is a useful tool used to gain insight into residential market trends first hand. It is of a sample of estate agents, predominantly in South Africa's major metro regions.

The first question asked agents their perceptions of residential demand in their areas, a subjective question where they have to give a score between one and 10, with 10 being the strongest level of demand.

In the first quarter of 2013 there was a noticeable increase in the percentage of estate agents citing stock constraints as an issue in their work, from 13 percent in the previous quarter to 23

percent.

Loos said stock constraints became the single-most important issue cited by agents when providing factors influencing their expectations of near-term activity.

Agents reported a longer estimated time of properties on the market in the first quarter, along with an increase in the percentage of sellers having to drop their asking prices.

From an estimate of 15 weeks and four days in the fourth quarter of 2012, the average time a house spent on the market rose in the first quarter of 2013 to 17 weeks and two days.

The percentage of properties sold at less than asking price was 85 in the fourth quarter of 2012. This rose to 89 percent in the first quarter 2013 survey.

Furthermore, agents were asked to estimate the average percentage asking price drop on those properties, where a price drop was required to make the sale.

This average decrease had remained stable for the past four quarters, at an estimated 10 percent, Loos said.

"It is possible that seller optimism increases as demand is perceived to be improving, and that in turn keeps prices ahead of demand," Loos said.

On a quarter-to-quarter basis, the first quarter of 2013 saw some increase in the percentage of first-time buyers, from 21 percent in the previous quarter to 24 percent.

Another noticeable improvement was that agents pointed to a further decline in the number of sellers downscaling due to financial pressure. In the first quarter of 2013 they estimated that 15 percent of sellers were selling to downscale due to financial pressure.

This was down from the previous quarter's 18 percent, suggesting that a large part of the household downscaling process, in order to adjust to the recessionary shock of 2008/09, had been completed.

Sapa