Quick guide to se­lect­ing the right ten­ant

Lesotho Times - - Property -

BUY­ING an in­vest­ment prop­erty and rent­ing it out can be a mu­tu­ally ben­e­fi­cial ar­range­ment for both the land­lord and ten­ant, pro­vided the owner of the prop­erty ad­heres to a few key prin­ci­ples when se­lect­ing a suit­able ten­ant.

This is ac­cord­ing to Adrian Goslett, Re­gional Di­rec­tor and CEO of RE/MAX of South­ern Africa, who says due to South African leg­is­la­tion, se­lect­ing the right ten­ant can be a rather com­plex process.

How­ever, there are sev­eral meth­ods that land­lords can use to en­sure that they are pro­tected from the risk of delin­quent ten­ants and choose the best pos­si­ble ten­ant to oc­cupy their prop­erty.

Goslett says the ini­tial step that land­lords should take be­fore they ad­ver­tise the rental prop­erty is de­ter­min­ing the con­di­tions of the rental agree­ment. He says land­lords should be spe­cific about what they want with re­gards to the con­di­tions within the agree­ment, deal­ing with is­sues such as pets and whether or not the ten­ant is a smoker.

It is es­sen­tial for the land­lords to stip­u­late in their ad­ver­tise­ment that each ten­ant will be vet­ted be­fore any rental agree­ment is en­tered into, he says. This will have a sig­nif­i­cant im­pact on the num­ber of po­ten­tial ten­ants who de­cide to view the prop­erty, nar­row­ing the se­lec­tion down to only those who meet the land­lord’s cri­te­ria.

Land­lords can nar­row down the se­lec­tion fur­ther by re­quest­ing that each po­ten­tial ten­ant fills out a de­tailed ap­pli­ca­tion form when ap­ply­ing. The ap­pli­ca­tion form should re­quest the ten­ant’s per­sonal in­for­ma­tion such as their em­ploy­ment details and con­tactable ref­er­ences.

Ten­ants can also be asked to pro­vide sup­port­ing doc­u­ments, which would in­clude a copy of their iden­tity doc­u­ment and a salary slip to ver­ify em­ploy­ment and af­ford­abil­ity.

Ac­cord­ing to Goslett, once the land­lord has re­ceived an ap­pli­ca­tion form with the at­tached sup­port­ing doc­u­ments, they will be able to pro­ceed with a credit check and crim­i­nal record check. He says dur­ing this stage of the vet­ting process, the ref­er­ences pro­vided by the ten­ant should be con­tacted and ver­i­fied.

Once the vet­ting process has been com­pleted and a suit­able ten­ant has been se­lected, it is im­per­a­tive that a com­pre­hen­sive and legally-sound lease agree­ment is drawn up, which stipu- lates all nec­es­sary con­di­tions in de­tail.

The terms of the agree­ment must be agreed upon and signed by both par­ties. To avoid any con­fu­sion or un­cer­tainty re­gard­ing each party’s obli­ga­tions, the lease agree­ment should be as de­tailed as pos­si­ble.

The agree­ment should in­clude a pre-oc­cu­pa­tion in­spec­tion re­port to be con­cluded with the ten­ant present, along with details re­gard­ing as­pects such as the de­posit, rental amount, main­te­nance and up­keep.

Time frames should be al­lo­cated to the re­quired clauses as well as penal­ties, should any con­di­tion be breached, he says.

Even though a lease agree­ment has been signed, the prop­erty still re­mains the land­lord’s re­spon­si­bil­ity. Goslett says if at any stage of the ten­ancy, a util­ity bill is not paid, the land­lord will ul­ti­mately be re­quired to set­tle the outstanding bal­ance.

Ideally, he says land­lords should be aware of what is hap­pen­ing with their prop­erty and en­sure that all ac­counts are paid and up-to-date. Golsett says cer­tain mea­sures can be taken to min­imise the risk posed by a de­fault­ing ten­ant, such as pre­paid elec­tric­ity and wa­ter me­ters, for ex­am­ple.

If this is not an op­tion, a de­posit for these ac­counts can be agreed upon be­fore­hand.

While land­lords need to be re­spect­ful of the ten­ant’s rights and their pri­vacy, it is ad­vis­able that home in­spec­tions are con­ducted on a reg­u­lar ba­sis. The in­spec­tions must be at the ten­ant’s con­ve­nience, en­sur­ing that any is­sues or breaches in the con­tract are dealt with as soon as pos­si­ble.

“If prob­lems are left, they will cost a lot more to rec­tify fur­ther down the line.

“For ex­am­ple, if a late or non­pay­ment is not ad­dressed im­me­di­ately, within a short space of time, the ten­ant could be a few months be­hind and in­cur­ring fur­ther util­ity costs.”

Aside from the es­ca­lat­ing costs, le­gal ac­tion may need to be taken in or­der to get the ten­ant re­moved from the prop­erty, which will also be a costly and time-con­sum­ing ex­er­cise, he says.

Ac­cord­ing to Goslett, a pro­fes­sional rental agent is a good op­tion for land­lords who don’t have the time to man­age their rental port­fo­lio.

For a per­cent­age of the rental in­come, an ex­pe­ri­enced, rep­uta- ble rental man­age­ment agent will have the ex­per­tise and re­sources to en­sure that the prop­erty is man­aged in the cor­rect man­ner.

He says a pro­fes­sional man­age­ment agent will as­sist the land­lord with ten­ant se­lec­tion, ref­er­ence and credit checks along with the day-to-day man­age­ment of the prop­erty. They will also be up-to-date with the lat­est le­gal and reg­u­la­tory de­vel­op­ments to pro­tect land­lords and ten­ants, he says.

Rental agents will have pro­ce­dures and sys­tems in place to pro­fes­sion­ally avoid any po­ten­tial prob­lems and deal with any dis­putes that may arise. If nec­es­sary, they will also have ac­cess to the le­gal re­sources and ex­pe­ri­ence to deal with any sit­u­a­tion ef­fi­ciently, he says.

If a prop­erty rental is han­dled in the cor­rect way from the start, with on­go­ing pro­fes­sional man­age­ment, many un­nec­es­sary and un­pleas­ant sit­u­a­tions can be avoided. Goslett says tak­ing the right mea­sures from day one could mean the dif­fer­ence be­tween a land­lord in trou­ble and one whose buy-to-let port­fo­lio is pro­duc­ing a reg­u­lar in­come and grow­ing in cap­i­tal value.

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