The 7 deadly rental sins to avoid

Lesotho Times - - Property -

A BADLY man­aged rental property can cause fi­nan­cial loss, stress and dam­age to the property. Here are 7 el­e­ments for land­lords, ten­ants and agents to think about.

1. In­ad­e­quate screen­ing of ten­ants This is the most wicked of the deadly sins, as poorly screened ten­ants are in­cred­i­bly costly in the long run. Find a trust­wor­thy rental agent to as­sist you in this area and pay for your ten­ant to be pro­fes­sion­ally screened. Never ac­cept ten­ants on face value, as they are of­ten des­per­ate to find a home and may re­sort to say­ing or do­ing any­thing to gar­ner your trust. Pro­tect your in­vest­ment and your­self:

Com­plete a thor­ough credit screen­ing with a recog­nised credit bu­reau

Ver­ify their em­ploy­ment and in­come, cov­er­ing at least three times the monthly rent

Keep a copy of their Id/visa or im­mi­gra­tion sta­tus

Con­tact at least the last two land­lords or rental agents listed as ref­er­ences

Do a Google or Face­book search to see if they are a good per­sonal fit for your property

2. Poorly struc­tured lease agree­ment With the dead­li­est of sins be­ing a ver­bal lease, a close se­cond, is a badly con­structed lease or one that falls foul of the law and does not ad­e­quately de­tail the obli­ga­tions and rights of both the land­lord and the ten­ant. A lease must be legally drawn up with clauses in line with cur­rent leg­is­la­tion and all par­ties’ in­ter­ests and rights out­lined. Don’t be tempted to buy an over-the-counter-lease at a sta­tionery store. If you can­not af­ford a legally-drawnup lease agree­ment, you can ob­tain one for a rea­son­able fee from var­i­ous on­line re­sources. Apart from the main el­e­ments of the lease be­ing the par­ties, premises, rental amount and dates, there are sev­eral other cru­cial el­e­ments that must also be in­cluded:

Which party is re­spon­si­ble for re­pairs and main­te­nance?

Who must pay for the up­keep of the gar­den and ser­vic­ing of the pool?

Who must pay for which util­i­ties and how will they be paid?

House rules that the ten­ants must fol­low in a sec­tional ti­tle unit

How will the lease be re­newed on the an­niver­sary of the lease?

3. In­suf­fi­cient dam­age de­posit An­other crit­i­cal er­ror made by agents and land­lords is not tak­ing suf­fi­cient dam­age de­posits. Tra­di­tion­ally, a one-month de­posit was the norm, but with ten­ants un­der greater fi­nan­cial pres­sure and reneg­ing on their last month’s rent, a min­i­mum of two-month de­posit is the re­quire­ment today. It is im­por­tant to bear in mind that the le­gal costs of deal­ing with a de­fault­ing ten­ant will also add up, so tak­ing a two-month de­posit is a bare min­i­mum. The de­posit re­mains the ten­ant’s property and needs to be de­posited in at least a sav­ings ac­count in a fi­nan­cial in­sti­tu­tion.

4. Rent due on the sev­enth An in­sid­i­ous ur­ban myth of­ten rears its head in rentals where ten­ants are un­der the mis­guided no­tion that there is a com­mon law ‘grace pe­riod’ for pay­ment, giv­ing them till the sev­enth of the month to pay. The fact is, no such law or premise in law ex­ists. The lease is the in­di­ca­tor of when the rent is due and fail­ure to pay the rent by such agreed date will ren­der the ten­ant in breach of the te­nancy. As a land­lord or agent, you need to en­sure that ten­ants un­der­stand the pay­ment method and due date, as well as the con­se­quent re­sults for late pay­ments.

5. Fail­ure to do in­spec­tions and make

records If there was one deadly sin com­mit­ted by land­lords and agents alike, that cause more dis­putes than any other, it would be ne­glect­ing to do an in­com­ing and out­go­ing in­spec­tion which is re­quired by law. Land­lords and/ or agents must jointly in­spect the property at com­mence­ment and ter­mi­na­tion of a lease and make a good record of the cur­rent state of re­pair of the property. Many land­lords ne­glect this ex­er­cise and pay heav­ily for it at the ter­mi­na­tion of the lease.

6. Fail­ure to plan and ex­e­cute mainte

nance As a land­lord, you are obliged to of­fer the property you rent in a fit and hab­it­able con­di­tion that does not hin­der the rea­son­able day to day en­joy­ment of the property. It is pru­dent as a land­lord to en­sure you ear­mark a per­cent­age of your rental in­come to­wards main­te­nance. It will mean you at­tract good ten­ants and keep cur­rent ten­ants happy. Of­ten dis­putes arise when land­lords and/or agents ne­glect nec­es­sary works and re­pairs that may ren­der a property un­fit or un­in­hab­it­able. In­spec­tions dur­ing the lease pe­riod are pru­dent and nec­es­sary to stay on top of small niggles that may be­come big is­sues later. Wear and tear is in­evitable and it is wise to main­tain a good state of re­pair in your rental property. Too many dis­putes arise where ten­ants de­cide to with­hold rental be­cause of ne­glected re­pairs and main­te­nance. A clearly de­fined lease also has bear­ing on how main­te­nance is han­dled.

7. Fail­ure to give ad­e­quate no­tice of

breach The fi­nal deadly sin is the fail­ure to ef­fi­ciently and swiftly ad­vise a ten­ant in writ­ing of a breach of te­nancy. Do not hes­i­tate to no­tify a ten­ant of their breach of te­nancy by the third day of the month if rent is due on the first. It sets a clear boundary and it means if le­gal ac­tion is nec­es­sary that you have al­ready ex­pe­dited the process so it may es­ca­late to a court of law. — http://www.pri­vateprop­erty.co.za

BUY property in a growth area.

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