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IoDSA Direct Law Volume 9 Issue 20

Questionable Amendments to the Act

Your regulatory universe

Once a commencement date has been gazetted, the Amendment Act 2014 will increase regulatory risk for owners that lease a dwelling (or their authorised agents or persons in possession that may lease or sub-lease).

A dwelling is:

A house, hostel room, hut, shack, flat, apartment, room, outbuilding, garage or similar structure leased; and

Any storeroom, outbuilding, garage or demarcated parking space leased as part of the lease.

For existing lessors, the additional or amended obligations imposed will apply 6 months after the commencement date.

 Questionable amendments

(i) Rental escalation and deposits:

The Minister can decide the calculation method for escalation of rental amounts and maximum rate of deposits for a geographical area.

 Note: This Act cannot act in a vacuum and does not automatically apply above laws such as the Constitutional limitation of rights.

(ii) Minister norms:

The Minister may decide, and amend as he or she feels, norms and standards for terms and conditions, safety, health, hygiene and basic living conditions.

 Note: It is preferable that a law is balanced and includes considerations such as hearing the other party, ensuring any limitation is rational and reasonable. For example, the Consumer Protection Act does not outright dictate agreement terms for relevant suppliers (including various lessors), but instead lists contract terms presumed not to be fair and reasonable as largely learnt from the common law, requiring the supplier to show that in a specific instance that such terms are actually reasonable.

 (iii) Habitable dwelling:

It will be an offence for a landowner not to provide and maintain a dwelling that is not safe and suitable for living, with adequate space, protection from threats to health, ensures physical safety and is structurally sound building). Where possible, a landowner must facilitate basic services to the dwelling. Finally, It will be an offence for any person to interfere, with the section 4A and 4B rights of the tenant and landlord;

Note: The manner in which terms such as habitable, suitable, where possible, facilitate and interfere are used in the Act makes them open to wide interpretation and abuse, with wide interpretations having a tendency to create legal uncertainty, increased legal actions and increased costs.

(iv) Subletting:

A landowner must show that not allowing a tenant to sublet a dwelling is reasonable.

 Note: A landowner takes a risk whenever renting to a tenant, and has to rely on background checks in the hope of getting a tenant that respects property and payment and other contractual duties – it may be feasible to consider a clause that if a tenant wishes to sublease that such tenant do background checks like the landowner has had to, at their cost, and gives the landowner a reasonable opportunity to consider whether the sublease is reasonable or not.

(v) Time periods: A tenant will have the right, subject to permissible deductions by the landowner, to receive payment of the deposit and any accrued interest without any deduction or set-off, within 7 days of expiration of the lease.

 Note: The unreasonably short 7 days given to determine amounts due and owing and reasonable repair costs (including joint inspection with tenant and getting several quotes), and then to make payment of the balance could be tested in court. Confusingly, section 4B(3) states that if there were repair costs then the balance must be refunded within 14 days after repair has been made, while section 4B(6) refers to 21 days after the expiration of the lease…

(vi) Inspections: The Act strangely insist on a specific date that a joint inspection must be made within a period of 3 days before the expiration of a lease. If a landowner fails to inspect within a period of 3 days before lease expiration then this will be deemed acknowledgement that the dwelling is in a good and proper state of repair and the landowner will have no further claim against the tenant. If the tenant fail to respond to the landowner’s request for an inspection then the landowner must, within 7 days from the expiration of the lease, inspect the dwelling in order to assess any damages or loss which occurred during the tenancy.

Item 2 continued …

Note: The 3 days given is highly irrational and does not consider that the parties may not, for reasonable reasons, be able to be there on such an exact date, or may have rather intended by mutual written agreement to decide on a different date that suits both of them better. The additional burden created by the law may have to be factored into lease costs. This provision is questionable on numerous grounds.

(vii) Privacy:

A tenant, tenant household and tenant visitors has a right to privacy (not be searched, not have property seized and not have communications infringed). This is subject to other laws (such as RICA, a court order or the future Protection of Personal Information Act and its exceptions to privacy rights) – a landowner must request a joint inspection to determine if there is any damage to the dwelling, and any inspection must be done in a reasonable manner after reasonable notice to the tenant.

 Note: The various laws with their various approaches to privacy could get interesting in practice, as a dwelling is generally the property of the landowner. Property knowingly used in the commission of an offence could make the landowner accessory to the crime, or trigger a Prevention of Organised Crime Act seizure. Landowners that reasonably suspect their dwelling is being used for illegal activities will need to consider the viability of notifying local authorities, and document any such reporting as proof in the event of inaction and proof that the landowner is not party to the offence. Landowners, where possible, may also need to consider being even more circumspect in their background checks of potential tenants, and in considering sublease requests from tenants.

(viii) Right to access to courts:

The Act will only allow for 14 days to appeal a ruling but this would go to a MEC, not a court of law. Reviews of Tribunal proceedings may only be taken to a court of law.

Note: 14 days is generally considered an unreasonably short period, depending on the facts of the matter. The unreasonably short 14 days given to apply for rescission could also be tested as possible precedent exists in Stefaans Conrad Brummer vs Minister of Social Development and Others (CCT 25/09). Furthermore, the Constitutional right to access to courts cannot be superseded by this Act, including the impression it creates that only reviews can go to courts while appeals on the merits end with a MEC.

GG38184 / 5 November 2014 (Incorporated into the Rental Housing Act and Regulations)

This IoD Direct Law is not intended as legal or professional advice and has been prepared as a summary and opinion on general principles of law or other common practice and is published for general information purposes only. Only specific professional advice should be relied upon as what is herein contained may not be appropriate in particular circumstances. This is not a substitute for legal or other professional advice. Note also that the views expressed by the editor of IoD Direct Law might not necessarily be the views of IoD.

 

 

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