Act puts landlords under fire
Demanding lease conditions largely aimed at providing major protection for tenants
WHILE the impact of the Consumer Protection Act on the manufacturing, supply and distribution of goods and services is clear, its effect on landlords and leases of immovable property requires scrutiny.
According to the definitions of the Consumer Protection Act, landlords, rental agents and buy-to-let investors can be seen as suppliers and tenants as consumers, both subject to the provisions of the legislation.
The Consumer Protection Act relates specifically to a landlord that lets premises as part of his ordinary business, as opposed to a lease arrangement in a once-off private situation.
While the act will have limited application retrospectively, standard lease contracts must be reviewed and adjusted to comply with the provisions of the legislation as there will be no mercy for any landlord whose house is not in order after the inception date.
The protection offered to consumers by the act does not apply to all consumers. For example, the provisions of the act will not apply to any transaction in terms of which the consumer is a juristic person — an entity other than a natural person such as a company — whose asset value or annual turnover, at the time of the transaction, equals or exceeds R2m.
However, in terms of property rentals, a consumer as defined in the act includes not only individuals in respect of residential leases, but also tenants of commercial properties such as small or medium business enterprises, where the Consumer Protection Act has onerous implications.
One of the most serious challenges to the security of tenancy normally created by long-term leases is that according to the act tenants may now provide 20 days’ notice of cancellation, despite any provision in the lease to the contrary. However, this provision is not applicable to leases involving juristic persons, regardless of their annual turnover or asset value.
While the tenant will remain liable to the landlord for amounts owed in terms of the lease up to the date of