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Due to the vast numbers of investors who have climbed on the ‘Buy to Let’ bandwagon,
the rental values of residential property has stabilized accordingly. This is simply
based on the old rule of supply and demand as Renters now have more properties to
choose from. Renting nevertheless still remains a very lucrative form of income
or additional income for many whether it be on a long term basis or as a short-term
holiday home. Renting privately will save you around 8% monthly of the rental amount
that most Rental Agent’s charge for ongoing administration i.e. collecting of rental,
payment of services, rates, etc.
If you have a property that you would like to let out for a decent sum then you
need to keep it in an attractive condition so that it is a good prospect in a busy
market. This does not need to cost you too much as all you really have to do is
make sure the place is bright and in a good state of repair if you wish to attract
a decent tenant. You should also read the link to ‘Advertising rental property’
on the Home Page of this Site.
Using a ‘Lease Agreement’ document
A ‘Lease Agreement’ can be entered into verbally and need not be in writing to be
valid. However, it is best to make use of a preprinted lease document when you wish
to conclude a Lease Agreement with a Lessee. Documents of this nature normally contain
a number of clauses controlling the relationship between the Lessor and Lessee.
This is done to avoid possible differences between the parties regarding their rights
and obligations.
The respective parties must have the contractual capacity to enter into an agreement.
A Lessee can be assisted by someone whose name should also appear on the contract.
In the case of a contract for a company for instance, the name of the company must
be noted together with the name of the person authorised to complete the contract
on behalf of the company.
Apart from clauses relating to the identity of the parties and description of the
leased property, most documents contain clauses dealing with the following:
- Rental and deposits,
- the lease period,
- occupation of the leased premises,
- defects and maintenance,
- use of the leased premises by the Lessee,
- the Lessee’s duty to restore the leased premises to the Lessor on termination of the lease,
- sub-letting and cession.
Unless you have a Lease Agreement that states differently, a Lessee is under no
obligation to pay a deposit. In practice, however, most lease documents require
the Lessee to pay a deposit from which the Lessor may deduct arrear rental, the
cost of repairing damage to the property brought about by the Lessee, and/ or the
cost of replacing lost keys. This should be held in an interest bearing account
on behalf of the Lessee and returned to them with the interest when they vacate,
unless there are claims against this amount as above.
The Lessor is not entitled to increase the rental unless the lease contains a suitable
escalation clause.
Unless the Lease Agreement states otherwise, rent is payable in arrear (at the end
of a month) in the case of a monthly lease. Most lease documents usually provide
that the rental must be paid in advance.
To secure payment of the rent a Lessor has a preferential right (called a tacit
hypothec) over movables brought onto the leased property by the Lessee. This means
that the Lessor can have the movable goods sold in execution if the tenant fails
to pay the rent. It is advisable to seek legal advice before taking such action.
The rent must be paid at a place agreed upon. If no agreement is reached then payment
must be made at the Lessor’s business or residence.
If a Lessor fails to fulfill his duties under the lease, the Lessee may withhold
payment of rent as a means of enforcing the Lessor’s obligations.
You can download a form of ‘Lease Agreement’ document from the info section of this Site by subscribing as a private seller or renter on the left side of this Site.
It is best to only proceed with the Lease Agreement paperwork after you have screened and approved an interested potential Lessee. Refer to Screening tenants and Rental Application Form.
A Lessee is only obliged to pay any additional payments to a Lessor over and above
the rental and deposit if this is regulated by a ‘Lease Agreement’ between two parties.
Usually a Lessee would pay for their own monthly services such as water, electricity,
telephone etc. The Lessor is still liable for the rates portion of the Municipal
account. If you live in a Sectional Title Complex then the Lessor should remain
responsible for the payment of any levies on the account from the Managing Agents
or Body Corporate.
When renting privately it is best for you as the Lessor to keep an eye on the payment
of the monthly services such as water and electricity by the Lessee. You can arrange
for the monthly invoice from the council to be sent to your own address in the event
that you are not living on the same premises as the Lessee. It must be noted that
if the tenant (Lessee) does not pay correctly for services or if they short-pay
every month then a mounting debt will result which will be hard to recover at a
later stage. Should you wish to sell the property at any stage then the onus is
upon you as the owner of the property to settle any debt with the council before
this can occur.
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