Browsed by
Month: February 2017

RENTING PROPERTY TO FOREIGNERS

RENTING PROPERTY TO FOREIGNERS

Renting property in South Africa is a straightforward process. The country has a vast selection of rental accommodation including bachelor flats in apartment blocks, Victorian cottages, stand-alone houses with big gardens, and semi-detached units in modern townhouse complexes.

In South Africa, the right of a foreigner to purchase immovable property was restricted in the past by the Aliens Control Act. These restrictions were uplifted in 2003 by the new Immigration Act (“the Act”) which repealed the Aliens Control Act and many of its restrictive provisions and now clearly defines who a legal foreigner is and who is not. In short, a legal foreigner is a person in possession of a valid temporary residence permit or a permanent residence permit approved by the Department of Home Affairs.

The new Act makes provision for various temporary residence permits to be issued to foreigners, including amongst others:

  • A visitor’s permit
  • A work and entrepreneurial permit
  • A retired person permit

In principle, a landlord or tenant can legitimately lease or sell immovable property to any person recognised under the Act as a legal foreigner.

That said, foreigners working in South Africa with a legal work permit, are not regarded as “non-residents” by the South African Reserve Bank. They are considered to be residents for the duration of the period of their work permit and are therefore not restricted to a loan of only 50% of the purchase price.

It is also important to take note that the Act criminalizes the letting or selling of immovable property to an illegal foreigner by making this transaction equivalent to the aiding and abetting of an illegal foreigner and is such an act classified as a criminal offence in terms of the Act.

In conclusion, a legal foreigner may let or buy immovable property in South Africa, provided that he is the holder of either a legal temporary residence permit or a permanent residence permit approved by the Department of Home Affairs. Ensure that you enquire from your potential tenant or purchaser whether they are legally present in South Africa and obtain the necessary proof from them before entering into any transaction with a foreigner. Also, take account of the restrictions on local financing, particularly where the procurement of financing is a condition precedent to the agreement.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

References:

http://www.expatarrivals.com/south-africa/accommodation-in-south-africa

http://www.avidfirefly.co.za/00000/index.php?option=com_k2&view=item&id=92:can-i-lease-or-sell-my-house-to-a-foreigner?

BREAKING NEWS: MHI ATTORNEYS – #1 IN THE WESTERN CAPE

BREAKING NEWS: MHI ATTORNEYS – #1 IN THE WESTERN CAPE

It gives us extreme pleasure in announcing that MHI Attorneys has just been nominated by Absa Home Loans (Western Cape) as Attorney of the Year!!!

Hierdie toekenning volg nadat MHI Prokureurs verskeie jare reeds presteer as een van die Top 10 Prokureursfirmas in die Wes-Kaap!!

Ons is so trots op ons verbande-span & wens vir Riëtte Smuts en haar span (Vikki van Antwerpen & Catherine Vorster) baie geluk. Julle verdien hierdie toekenning deur & deur.   Ons beste wense ook aan Jurgens Tubb wat die Verbande-Afdeling met sy unieke styl bestuur!!

Doen so voort!!!

Kestrel

New Appointment (Attorney):

Kestrel Carstens has been appointed as a permanent member of the MHI Professional Staff.   She is employed in the Litigation Department as Professional Assistant to Chris Faure.

KESTREL CARSTENS

Kestrel matriculated at Girls High School in Paarl and completed her studies at the University of Stellenbosch, where she obtained a LL.B degree in 2014.   She then commenced her Articles at MHI Attorneys.

MHI wens Kestrel geluk met haar onlangse toelating as Praktiserende Prokureur!   Ons is met reg trots op Kestrel se prestasies en aanstelling!

Kestrel is ʼn welkome aanstelling in Chris Faure se groeiende litigasiepraktyk.

Nuwe Aanstellings (Kandidaat Prokureurs):

MHI Prokureurs het onlangs 2 bykomende Kandidaat-Prokureurs aangestel.   Dit is ons voorreg om vir Denver Titus & Grantham Williams te verwelkom as deel van die MHI-Span!

Denver
Denver hails from Namibia, where he matriculated at St Paul’s College in Windhoek.   He subsequently enrolled at the University of Cape Town, where he obtained a B.Comm degree in 2013 and a LL.B degree in 2016.   Denver commenced his Articles as Assistant to both Chris Faure and Kestrel Carstens.

DENVER TITUS

Grantham


Grantham het plaaslik gematrikuleer by die Hoërskool Stellenberg, waarna hy sy studies by die Universiteit Stellenbosch voortgesit het.   In 2016 verwerf hy sy LL.B Graad.   Grantham doen sy Klerkskap onder die bekwame leiding van Jurgens Tubb.

 

GRANTHAM WILLIAMS

We wish both Denver & Grantham all the best with their Articles & their brand new careers!
PAYMENT OF BUILDING DRAWS- KNOW YOUR RIGHTS

PAYMENT OF BUILDING DRAWS- KNOW YOUR RIGHTS

When purchasing a property in a new development directly from the Developer, normally one of the agreements entered into between the parties is a Building Agreement.   Apart from the daunting fact that the Purchaser signs an agreement instructing a Contractor to build your dream house on a vacant piece of land at the time that the agreement is entered into, the legal jargon contained in the Building Agreement can in itself be incomprehensible or just downright confusing.   Read more about what you need to know and understand about the payment of building draws

Most new developments requires a Purchaser to sign a Deed of Sale for the purchase of a vacant plot, together with a separate Building Agreement to be entered into between the Purchaser and the Developer regarding the terms and specifications for the erection of your house on the plot, subsequent to transfer.  The simultaneous conclusion of these two agreements is normally made subject to each other.  It also sometimes happens that the building contractor with whom a Building Agreement is entered into, is not the same entity as the Developer from whom a plot within the development is bought.

The terms of a Building Agreement between the prospective Purchaser (called the “Employer” in a Building Agreement) and the Contractor, set out the contract sum for the house to be build, and also normally includes a detailed list of the specifications of the house, as well as the cost and detail of any extra additions required by the Employer to be added to the property.

The clause containing the contract sum will also deal extensively with the dates and times by when the Employer is required to pay instalments of the contract sum to the Contractor.  By means of example, the Building Agreement will normally refer to payment of 20 (twenty) percent of the contract sum when the dwelling reached floor height, 20% when the dwelling reached roof height and so forth, up until 100 percent of the contract sum have been utilized.

The Building Agreement will normally also contain further clauses relating to the financing of the contract sum, for example, by means of a building loan or otherwise, as well as the completion date for the erection of the dwelling, public liability insurance and the like.

The Contractor will not commence any building operations until the full contract sum is secured, either in terms of a building loan with a financial institution, and/or the payment of the full contract sum into the trust account of the Conveyancers instructed to attend to the registration of the development.

It is important to note that the Employer is only liable for payment of the contract sum in accordance with the instalment percentages agreed upon in the Agreement, and only once the Contractor have reached the various levels of progress with the erection of the dwelling as agreed upon.   As such, a Contractor is for example not entitled to request a progress draw payment/instalment prior to commencement of the erection of the dwelling if the Building Agreement stipulates that the first progress draw payment can only be requested from the Employer when the dwelling reached floor height.  Even though this is common practice, there is no contractual basis for a Contractor to request payment of any instalments towards the contract sum prior to commencement of the building operations if the Building Agreement does not make provision for any upfront payments.  The Employer is also under no obligation to entertain such a request for payment if the Agreement does not provide for same.

The above also applies in respect of the payment of each progress draw or instalment to the Contractor.  Should the Employer’s contract sum be invested in the trust account of the Conveyancers dealing with the development, the Contractor should request payment of a written building draw instalment to the Conveyancers upon the Contractor reaching a specific stage in the building process requiring payment of a building draw.  The Conveyancers should obtain the written consent from the Employer authorizing payment of the amount of the building draw instalment prior to any payments being made to the Contractor.    The above measures are protecting the Employer from losing control over the payment of building draws and preventing a Contractor from receiving any portion of the contract sum without the required progress in the building operations being made.

The Employer should also make the necessary enquiries with the Conveyancers to ascertain the exact amount of fees charged by them to administer the payment of building draws and to obtain the relevant parties’ consent.  As this requires the Conveyancers to make payments from the Employers investment held on the Conveyancers’ trust account at the office of the Conveyancers, a nominal administrative fee is normally charged by them for each building draw instalment having to be paid to the Contractor.

In short, Employers, be sure to keep close tabs on the progress with the building of your house, and make sure that you know exactly when and for which amounts building draw instalments is being requested.  Keep diligent records of any payments being made, and seek independent legal advice should you feel that you are being pressurized to make payments without the Contractor living up to the terms of the Agreement.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

IS MY TENANT RESPONSIBLE FOR THE WORN OUT CARPET?

IS MY TENANT RESPONSIBLE FOR THE WORN OUT CARPET?

There are several damages a landlord can deduct from a tenant’s deposit. However, there are certain household items that will experience normal wear and tear over time. This is referred to as “fair wear and tear”.

Fair wear and tear is seen as damage or loss to an item at the property which happens as a result of ordinary use and exposure over time.

According to the Rental Housing Act, a landlord is free to claim compensation for damage to the property caused by the tenant, except for fair wear and tear.

It’s important to remember that the original condition and age of the item at commencement of the lease agreement needs to be taken into account, and therefore cost of depreciation of the item due to normal wear. Paint fades, doors and walls get scuffed with use, and everything wears or breaks over time, even with a tenant who really cares for the property, and one can’t hold a tenant liable for this.

If a tenant or landlord has a problem, they can go to the Rental Housing Tribunal to resolve it.

The Rental Housing Tribunal

The Rental Housing Tribunal is a useful resource for both landlords and tenants who are dealing with rental property disputes in different forms. Cases that the Rental Housing Tribunal deals with include:

  • Tenants defaulting on their rent
  • Failure to repay a deposit
  • Invasion of a tenant’s privacy
  • Overcrowding of a rental property
  • Determining a fair rental amount
  • Illegal seizing of a tenant’s property
  • Discrimination against a prospective tenant
  • A receipt for rent not being issued
  • Unacceptable behaviour by a tenant
  • Lack of maintenance and repairs to the property
  • Illegally refuse a tenant access to the property or interrupt services
  • Unacceptable living conditions

A general rule of thumb is that, if a tenant has damaged something that does not normally wear out, or the tenant has substantially shortened the life of something that does wear out, the tenant may be charged the prorated cost of the item. The landlord should take into account how old the item was and how long it may have lasted otherwise, as well as the cost of replacement.

Conclusion

Ordinary wear and tear to carpets should not count against the tenant, however large rips or stains would be considered damage. Any deduction for the tenant’s deposit should take into account the age of the carpets, compared with the expected total time of usage.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

References:

http://www.lettingworx.co.za/blog/item/fair-wear-and-tear-on-rented-property.html

http://www.privateproperty.co.za/advice/property/articles/what-is-classified-as-fair-wear-and-tear/5010