The Consumer Protection Act 68 of 2008 (CPA) came into effect in 2011, and of particular interest to the brief discussion in this article it came with changes with regards to rental agreements. These changes include rights and obligations pertaining to early cancellation as well as the maximum period for a lease period.
In terms of its regulations which were promulgated, fixed term agreements shall not be more than 24 months, which means property lease agreements are also limited to a period of 24 months unless ample cause is proven to deviate from this provision e.g demonstrable financial benefit. Upon the expiry of the 24-month period the agreement will continue a month-to-month basis until the parties conclude a new agreement.
A tenant may cancel a lease agreement upon sufficient notice of 20 business days. In practice this means a tenant may indeed exercise this right way before the expiration of the term of the lease e.g 24 month period. However one needs to know that the tenant will still be liable for any charges and rates accruing until the date of the cancellation. In some cases further, the landlord or their agent may require, upon good cause that the tenant who exercises the right to early cancellation compensate for loss directly attributable to such early cancellation i.e early cancellation penalties. These are not a given but must be proven on good cause.
Cancellation penalties may be related to credit checks of new tenants, advertising costs, and income for the period when the property will be vacant. Regulation 5(2) of the CPA however provides a guidance on how such penalties may be arrived at and from the wording it is clear that the purport is not to cripple and punish the tenant who exercised a right otherwise provided for in the CPA, but that the landlord also has legitimate financial interests that must be protected in the same way.
Landlords may also cancel a lease agreement on 20 business days’ notice to the tenant where the tenant materially breaches the terms of the contract and remains in default even after being invited to remedy the breach. If the landlord does not wish to persist with the lease agreement upon the expiration of the 24-month period, written notice must be furnished to the tenant before the lease agreement comes to its end.
We assist in a wide array of matters including all types of contracts and property law. Contact us for an appointment and consultation with attorneys in our property department.
Find out more about: Does the Consumer Protection Act apply to Estate Agents?
The information contained in this site is provided for informational purposes only and should not be construed as legal advice on any subject matter. One should not act or refrain from acting on the basis of any content included in this site without seeking legal or other professional advice. The contents of this site contain general information and may not reflect current legal developments or address one’s peculiar situation. We disclaim all liability for actions one may take or fail to take based on any content on this site.
Subscribe to our Newsletter
Estate Agent Training
Bond & Transfer Calculator
Get the latest updates in your email box automatically.