5 Things to note in a rental property agreement
Category Newsletter: Lead Article
Rental disputes are always best avoided - both for the tenant and the landlord. "When it comes to rental property you want to make sure of two things - the first is that there is a watertight (and signed!) rental agreement in place and, secondly, that both parties are clear on the terms of the agreement." This is according to Harry van der Linde, Rentals Principal at Leapfrog Moreleta Park.
The rental agreement is the foundation of the professional relationship between the tenant and the landlord. As such, it needs to be unambiguous, relevant and designed to protect the interests of both parties in equal measure.
Van der Linde's advice to tenants is to ensure that every stipulation in the agreement is clearly understood, but says to pay special attention to the five points below.
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The rental amount
When it comes to money there should be no ambiguity. The rental agreement must clearly stipulate the monthly rental amount, as well as what that includes and excludes. "Some rental agreements may include the cost of electricity, for example, while other landlords levy that as an additional charge," Van der Linde explains.
In fact, tenants should not assume that the cost of electricity, water, property levies or even maintenance is included in the rental amount. "What tenants should assume is that the onus is on them to ensure they fully understand what they will be required to possibly pay extra for.
Tenants may be charged for once-off and/or miscellaneous expenses like the cost of drawing up the rental agreement, having keys cut or remotes programmed.
It's a good idea for tenants to ask the landlord to list all the costs in writing for greater transparency, together with when each is payable and whether it's likely to recur annually.
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Lease period
Generally rental contracts are for a fixed period of 6 or 12 months, though some landlords allow for month-to-month rentals.
Naturally it happens that a contract needs to be terminated early, so it pays to be aware of the implications of doing so. There may be penalties payable upon early termination, but this should then be stipulated in the agreement.
"Early termination may mean forfeiting the security deposit but some landlords will only charge a small 'early exit fee' or ask that the tenant help to find a replacement, so it really depends on the terms of the agreement," Van der Linde says.
The Consumer Protection Act does make provision for the tenant to terminate the agreement upon giving 20 business days' notice, though the agent may then claim for any losses suffered.
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Annual increases
Annual rental increases are acceptable, if not expected, but an unusually high increase (above inflation) is likely to cause unhappiness. Tenants are within their rights to ask the landlord if a maximum annual rent increase can be agreed upon and noted in the rental agreement
It is also in the interest of the landlord to retain the business and goodwill of the tenant - particularly one who pays on time and looks after the property - which means tenants do have some leverage when it comes to rental increases.
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Rules about pets
Make sure any rules about keeping pets at a rental property are clearly understood and agree to before signing the agreement. "It happens that tenants find their ideal home only to find out that the rental agreement does not allow for pets to be kept on the property. Understandably this causes a lot of frustration and disappointment. As agents we always make sure to stipulate any rules about pets upfront, and recommend that would-be tenants clearly stipulate that they are only interested in pet-friendly places," Van der Linde shares.
However, if pets are allowed on the property the agreement needs to stipulate what type of pet, as well as how many pets are permitted. For example, a landlord could take "pet" to mean dog or cat, but would have no problem with fish in a bank or birds in a cage.
It's always better to err on the side of caution, so make sure any and all rules related to pets are noted in the agreement.
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Maintenance matters
Generally maintenance on a rental property is the responsibility of the landlord but make sure to have clarity on that with the landlord, just to be safe.
"It may be that the tenant is required to keep the garden neat and clear, while the landlord commits to painting the property every five years," Van der Linde shares as an example.
Notify the landlord of maintenance issues as soon as they arise, and note them in writing so that there is a paper trail should a dispute arise.
"Remember, the purpose of a rental agreement is to protect the tenant and the landlord. Make sure you're familiar with every aspect of it," Van der Linde concludes.
Author: Leapfrog Property Group
