Exorbitant increase on termination
LANDLORD VS TENANT It is often said by property landlords that the best — and indeed the only — time when rental payments on a lease can be raised significantly is when one tenant leaves and another moves in.
Until then the landlord has to abide by the annual rental increases that are stipulated in the lease agreement — and these are usually in the region of 10% and seldom higher than 12%. What happens if after the lease expires the agreement says that the tenant has the option to renew at an unstipulated price? This situation arose in a court case (Beau Investments v Maverick Trading) to which Graham Leslie, MD of Greeff Properties, has drawn attention. The landlord decided the time had come for a substantial increase and informed the tenant. The tenant regarded the increase as exorbitant, remained in occupation but refused to pay the full amount. “Many people would have thought that the option clause entitled the tenant to assume that the previous rate of increases would be continued, but this was not the way the court saw it. They ruled that, in the absence of any specific agreement on this matter, the landlord was within his rights and ordered the eviction of the tenant,” said Leslie. This case, said Leslie, will no doubt strengthen the conviction among many people that the law is weighted in favour of landlords.