 Good evening and welcome to episode 302 of the Private Property Podcast with myself, Usamandonga Kumalo. It is of course a very exciting evening. I'll get to why I'm so excited about this evening's conversation and this evening's guest. If you're joining us for the first time, welcome to the show. You are tuned into the only daily property podcast in South Africa. So do make sure that you also go to our Facebook and YouTube page to catch up on all the great content that we've already brought to your screens. And all our regular viewers, you know how we do it. Every single weekday at 7 p.m. you and I have an appointment where we're always, we're certainly always in conversation with a property expert who helps us navigate our property journey. Doesn't matter where you are in your property journey, we're certainly here to help you out. Whether you're a top fan, gang member, or of course always sharing a spot and showing us some love and sending those green hearts down here below. We absolutely love hearing from you at home. And you're going to also, of course, tune into our other great shows across private properties, social media pages. As it is a Wednesday, you can look forward to the first time home buying show with Estie Carson that comes to screens this evening at 8 p.m. She's always in conversation with people who've not only walked that first time home buying journey, but have gone on to grow their property portfolios from strength to strength. So if you're looking to get your foot in the property ladder and certainly scale your property portfolio, then that is a show that you also want to make sure you tune into to get a sense of how other people do it as they share some of the lessons learned, mistakes made, and things that you absolutely want to avoid. And every Tuesdays and Thursdays awarding a farmer by doing what will come to your screens and brings us the farming podcast where she tackles all things agriculture. So if you've got an interest in agriculture, perhaps want to be a farmer yourself. I know that a lot of people, especially in urban areas, are looking at different ways that they can grow their own food, especially as we look at the advent of food security and just how difficult it sometimes and how pricey it sometimes can be for us to buy some of our food. So we're really looking at different ways we can cut costs as much as possible. So that is a show that you can tune into that you can get matters relating to agriculture. You can certainly be able to get a better sense of how you can navigate that industry. And of course, every Mondays and Fridays, a child comes to your screens with the whole shocker show. Amazing that you can find on www.privateproperty.co. Lots of Johannesburg to those very, very pricey mentions that I'm sure many of us at home want to eventually be able to live in. Chad certainly does have you covered. He certainly gives us a great sense of what we can expect in different properties. Those are the great shows that you can catch across properties, social media platforms, every single weekday at 8 p.m. You make sure that you're always in touch with us for us on Instagram, Facebook, on Twitter, on LinkedIn, and of course, on TikTok. You can follow myself at Zamantho Moa underscore K on Twitter as well as on Instagram. Now, I did say that I'm quite excited about this evening's conversation. And the reason why I'm a bit excited about it is because it really is one of those things that we've spoken about before. And now we need to look at what, how can we use this or work around the system beyond the time of crisis? Because every time I've spoken about this, it has been in the context of the crisis that we're finding ourselves in right now, which is fantastic. And we certainly need to know how to do this thing. But how can we also make sure that we have the right systems in place outside of the crisis? And what we're going to be looking at is the rental recovery packs. And if you remember, these were the packs that came out saying to the industry, when we went into lockdown last year, it was, you can find it on the TPN website, we've had Michelle Dickens from TPN, as well as SSLR Incorporated. We also had Salma Stan, who's my guest this evening, who really spent quite a bit of time talking us through the lease packs. And we finished here shortly from Salma for years ago, but probably weren't, you know, tuned in previously, what the rental recovery pack was, the need for it. And whether or not we can still use it to date, you know, is there still a need for the rental recovery pack? And of course, different ways that you can deal with crisis. Also, your tenant not being able to pay. How can you enter into an arrangement with them? And of course, we've brought none other than Salma Stan to help us make sense of this. Salma, good evening, and thank you so much for joining us on the show. Hi, good evening, Salma Tungua. Thank you so much for having me again. It's always so much fun to to spend seven o'clock with you. It's always such a pleasure to have you on the show, Salma, especially because you're really able to to to have us understanding what the law says in an accessible way. Because I think oftentimes, when it comes to legal matters, particularly property matters, you know, a lot of tenants tend to just generally not know these things, because nobody teaches this, teaches us this, we don't go to law school, not everybody needs to go to law school. I did law school, I can tell you now you're not missing out on anything. And I think many landlords were also then finding that they, you know, they started their property investment journey, often accidentally, and they themselves also don't quite know, you know, the ambits of the law, what to can or cannot do. So understanding what can and cannot be done, particularly with, you know, people's monies, and when they can't pay is such an crucial thing for us to understand. And I want us to, you know, the starting point for our conversation, Salma, I want, if you can share with our listeners, you know, what the rental recovery pack is, and why ourselves and TPA came together and saw a need for this, this pack, for this rental pack. It's such a good conversation to have so much more when you, when we started discussing this episode and what we're going to be doing. I thought, wow, it's amazing. I can't believe it's been more than a year since we released the rent recovery packs. And to be quite honest, I didn't even know that people are still interested in that and that there's still questions around it. So I'm very happy that we're having this conversation. The reason why we did that was last year, March, we realized, oh, and other things are going clear shaped here, and we are probably going to head into into a lockdown. Michelle Dickinson, I had a conversation and we said, whoa, okay, if people are going to be prohibited from leaving their homes, and they can't trade, they can't earn an income, how do we, how do we help this? What do we do? I should attend and stop paying rent. Remember, last year, March, April, there was a lot of conversation about the obligation to pay rent. And a lot of countries, not a lot, not a lot, I'm wrong. A few countries did have the ability to support tenants and they paid rent on behalf of tenants. Unfortunately, South Africa is obviously not one of those countries. We don't have deep enough pockets for that. And unfortunately, there was no government support when it came to rentals. So what we did is we allowed, we drafted these documentation to allow a landlord and tenant to talk to each other, meet each other halfway, and then pay either deferred payments, so a reduced amount to pay later, or completely reduced amount not to be repaid. And the way the documentation was drafted was specifically with COVID and lockdown in mind. Now the thing is, at the time, luckily, we already sort of foreseen the situation where we're not going to be in lockdown only for three months and where the national state of disaster wouldn't have been for three months. So just for the viewers, the reason why the original state of disaster was only for three months is that is what the provisions of the Disaster Management Act of South Africa says. You did clear state of disaster for three months, which can be extended or reduced by the minister. And it's been extended to this very day and probably every month on the 15th of every month, we just have a month's extension. And that is in terms of the Disaster Management Act. So it's very important to know that the content of that agreement where there is a provision and it's a defined term recovery date. And the recovery date is specifically defined as three months after the end of the national state of disaster. Now, where we are currently is still in that same national state of disaster. So we still haven't reached the recovery date in terms of those of those documents. We did allow for cancellation of the agreement because we knew it's going to probably take longer. And the reason why this is relevant is repayment of the reduced amounts or the deferred amounts would only kick in from recovery date. And we allow for cancellation in terms of those agreements if it extended, which it did. And the landlord says, you're okay, but I can't keep on supporting you. You need to start repaying as there is a provision for cancellation. That was a very long explanation. I'm sorry. And I think the big thing about it is it's really getting an understanding of that there was meant to be an end date. Initially, I mean, we saw very quickly that we're not going to be in a 21 day lockdown. And so we thought, okay, maybe it will be that three month window period. And we also very quickly saw that actually it's not going to be the case. And because we've had so many different extensions, because we're still in the national state of disaster, the wording then becomes quite important because it would have meant that initially you had a three months after the recovery date, meaning probably the end of the national state of disaster, then payment can resume or regular payment, or back to the original amount, except we still haven't gone back to it. Meaning that nobody would have anticipated that that would still be the case so many months later. So now that we have a good sense, certainly of the timeline provision, that's actually a very important starting point that this isn't this wasn't something that was there previously to this, and that we're at in vision that an end date would coincide with when the national state of disaster would end, it hasn't ended. So we're still living within within that ambit. When we then consider that so then how do landlords, especially now, how can they make use of the least that because as we're saying that there isn't, we don't have a day, right? As much as we're seeing vaccinations, you know, coming in and even younger age groups being able to vaccinate, the reality is that by November, December chances are we're still going to be living in a state of national disaster very well into the New Year. So in the event where landlords are finding that some of their tenants are even a new tenant, because I think one of the realities of having been living in this new normal for such a long time is your previous tenants lease agreement may have potentially ended by now. Perhaps that same tenant has renewed it. Perhaps you've now gotten a new tenant, whichever one it is, but you are essentially now in the middle of another lease agreement for argument sake, or in the middle of the one that you had last year. So in the event where a tenant right now is struggling to then pay, how can they make use of the lease pack, given that the we still have a limitation on, you know, the end the end date, so to speak, or when payments or regular payments can resume? Yes, so the range recovery pack specifically, it's it's still free and it's still available on on TPN's website. So anybody can go and download it and read it. The problem with with those documentation right now is, well, there are two, one is the deposit utilization agreement. And to be honest, that was an agreement that was drafted with the good old term desperate timescales for desperate measures. And I would never, ever, ever, ever, unless it's in a crisis crisis mode, like we were last year, March, April, and I would never suggest that a landlord and a tenant agrees to release the deposit. So basically agree that no deposit will be held. So the tenant can use that for payment offering. The reason why it was relevant last year is we knew that the actual full lockdown would only be for late school, a month, max two months. And thank goodness we were correct in that connection. That's that that stability. But it's a it was a very necessary. I almost want to use the word evil, but I don't mean that it was evil. You don't want to go through a rental transaction without a deposit. But in a situation where there would be no cash, the landlord wouldn't have been able to pay the bond tenant really doesn't have an income. Let's say the tenant was a nail technician, and she couldn't work. She really just weren't allowed to work. No income. The landlord, let's say for instance, also had a similar job and really couldn't earn an income. The only money that could flow at that time was the deposit. So where we are now, we don't have full lockdown. We're in levels four, eight straight. And I mean, two weeks for the first two weeks of this lockdown, level four, restaurants were closed. We're at this stage, luckily they are open still with the alcohol ban. We obviously have less patrons, but there isn't any really any person who isn't allowed to earn an income. I know there are people that's struggling, but there isn't a strict limitation like we had last year, March, April. For that reason, I would not, I would not suggest the deposit utilized agreement unless there's a very specific reason for a very short term inability to pay rent and the deposit can be used. The other document being the rent recovery document, it's the rent ref deferment agreement. That can be used. Let's take, for example, the tragedy that hit us last week, where there are people who, as a result of the looting and the burning down of shops and full destruction of businesses. If somebody for that reason now is going to go into a two or three month period where they will not be able to meet their rental obligation. They can still use those agreements, but be very careful of using them as is. Reason why I'm saying this is the rent recovery back specifically makes mention of COVID and the pandemic and the effect of the pandemic. So the looting and the destruction of property there that we've seen last week. Unfortunately, it's not going to be a perfect fit in the rent recovery back and the deferred agreements. What you do have and what I do suggest is as part of the lease back. Unfortunately, the lease back is not free as the rent recovery backs up, but it's at a particularly awesome cost for the kind of documentation that you have in that back. I am personally one of the drafting attorneys of those lease documentation. So I know them pretty well and I've even translated them to Africans. I really know them well. So in terms of those documentations, documentation we do have attendants and we do have AODs acknowledgement updates and I would rather suggest use something like that. Say for instance, you're a landlord and you have a tenant that doesn't earn an income right now because of either covid lockdown level for all the destruction of property last week whatever the situation might be. I would look at something like that potentially doing it then them to reduce the rental amount for a safe period of time. If you want them to repay that use it in conjunction with the acknowledgement of it to say okay your rent was supposed to be then it's seven now the three thousand runs you're going to have to repay that at some stage. Use that then in the acknowledgement of that rather than try to make it work with the rent recovery bugs. If the reasons for inability to pay actually does go to lockdown level four more than welcome and the rent recovery bug still sits perfectly well and like I said it's free to download. So before you start wondering what to do download the same read it see if you can again make it work. I'm in conversation this evening with Silne Stain who is the managing director at SSLR Incorporated. We look at rental lease packs. So if you're a landlord or even a tenant because I seem to be still not off air one of the things that we're like I'm realizing is that you know tenants themselves also don't know some of their rights and sometimes don't know what kind of resources they can use to communicate with their landlord in the event where they are unable to make rental and they've been a genuine crisis and you want to be able to put a legal document in place so that your landlord also doesn't think that you're trying to pull a fast one on them. So this is also relevant for tenants because it equips you with the knowledge of being able to go to a landlord and saying you're currently in a difficult financial position could be because of COVID or you know something else and this thing that can be used for us to be able to enter into an agreement as opposed to just having a verbal agreement because we only say get things in writing when it comes to you know your landlord and tenant relationship it's not enough to just have a conversation about it. So as a tenant you're now also able to have the knowledge to be able to raise this with your landlord and I want to find out from you at home especially when it comes to you know rental from the tenant side have you been able to approach your landlord in the event where you've struggled to make rent for the month and what has generally been their reception and this could have been because of COVID or of course other life circumstances because as we're saying there's so many things have unfortunately happened over the past year that it could very well happen that it's not directly due to COVID but your finances have been affected and you unfortunately won't be able to make rent and to the landlords I want to find out from you how do you handle it when your you know your tenants message you to say I won't be able to make rent do they even contact you prior to the first because I know some landlords would be like look it's now the third and they still my tenant is still not paid so how do you approach your tenant in the event where rental hasn't been paid do you have a system in place where you know come the second and you saw that there was no rent in place you just send the standard later of demand or are you more I'll first have a conversation found out hey what's happening if you forgotten do share with us down below how you manage late rental payment whether you're the tenant making the late payment or of course the landlord receiving that late payment now so now one of the things that we've also then seen with the rental and the way that we've seen the rental market over the past year is that many places their rental amounts have significantly dropped quite a lot they've obviously also seen very high vacancy rates in certain in certain cities and one of the things that I've seen you know sometimes tenants do is wanting to leave their current place prior to the lease expiring and sometimes it could be because let's say for example their finance is affected and they just will no longer be able to make that rental sometimes it's actually because rental in that apartment block used to be ten thousand and now because of the state of you know the rental market it's gone down to seven thousand and they'd rather just get that place which is the same complex so they're still in the same place and save that three thousand rand for themselves so they want to cancel and at least early perhaps take us through the the risk of cancellation because one of the trends that I keep seeing is tenants saying I want to cancel you know my lease or I need somebody to take over my lease I think we see that a lot and and I always you know I always just shake when everybody say when I see especially tweets of people asking for you know a tenant because they want somebody to take over their lease perhaps you'll take us through any cancellation and of course how actually tenants can't their lease yes so I'm very happy that we're having this conversation because it breaks my heart every single time I see cases comes through through SSL off and we need to actually get a judgment against the tenant in terms of the lease agreement for the early cancellation penalty and we do and we are successful with those every single time unfortunately the tenant at the time of cancelling doesn't know that they are going to be in for for these costs let's let's take for example a gym contract if you cancel your gym your gym contract and you still need to pay for two or three months it's usually not you know it's not going to break the bank as a rental does because what happens is you do have a right in terms of section 14 of the consumer protection act the consumer in our context obviously the tenant does have the right to cancel that agreement by giving the supplier in our context the rental 20 business days notice of this cancellation now where people go wrong with this is they believe that if they give longer notice so instead of the 20 business days they give three months notice or two months notice or whatever that that's going to remove the obligation to pay this early cancellation penalty that's not the case the access give the the suppliers of the land at least 20 business days notice then you can cancel the agreement but the supplier the land may impose a reasonable cancellation penalty and then that gives us a few pointers that you need to consider those pointers typically relate to situations where the parties did not agree to an early cancellation penalty now in most most lease agreements we do make provisions for an early cancellation penalty and in most cases it's going to be about two to four months rent so if you consider a lease agreement that's been running for say it's a yearly agreement and you in month eight now you see the flat next to you go you know freeze up and it's going to be cheaper but you're going to be in for three months early cancellation penalty and eventually you're going to end up paying rent at the new place but you're also going to pay early cancellation penalty at the previous place you very often end up in a worse or financial position then in a better position and I think this is the scary part you need to look at the terms of your lease agreement now I say this was the necessary respect to the rental housing tribunal but I think it's very important to mention a lot of times when people go to the tribunal to to to complain about the early cancellation penalty some of the tribunals especially in the western Cape does not like to give orders in terms of this early cancellation penalty and the problem is remember guys the rental housing tribunal is not a court it's a statutory body created by the rental housing act and they can be reviewed and they can be corrected by a higher court like the magic court or the high court and we've seen that in in cases so don't believe because you were successful once in the tribunal that the next landlord you go to the bargain on the fact that they're going to go to the tribunal and that that tribunal commissioner is going to give the same order because if they go to court and and I mean we've done a lot of these cases and and we are successful in enforcing the rights that the landlord have in terms of the lease agreement you could end up with a judgment against your name which you could have avoided I mean you could have avoided all that drama and court cases and legal costs and and let's be fair eventually to end up with a judgment against your name is going to mess around with cell phone contracts with closing accounts not that I'm a fan of that but it's going to mess with with so many things so so try to avoid that but the way to avoid that is not by finding a new tenant there is no obligation on a landlord to accept the tenant that you introduce to him the landlord has the complete right and restriction to decide on the tenant that he's going to contract with all these agreements he has a provision that says this agreement may not be seeded or assigned that means you can't just say oh Mr Landlord yes my good friend Zama Tungua she is going to move in and she's going to be your tenant now you're going to love her she's so she's a pleasant pleasant lady and that is not the way to get away from the early cancellation penalty definitely not quite to the contrary I've seen a lot of tenants do that and the landlord does not accept that tenant which he has the right not to if the tenant takes the boxes on credit rating and everything checks out I must say there is definitely an obligation on the landlord to mitigate his damages so the landlord bond or lack of a better word this is what you said in the beginning Zama Tungua I have a way with legal terminology the landlord bond just be stubborn and spiteful and upset with you and not place the tenant if you can show that the landlord did have an opportunity to mitigate his damages and he did not he's going to have an uphill battle in court to get that early cancellation penalty from you but if the friend that you want to place does not fit the landlord's waiting criteria he doesn't have to place and I think you know I know that we're running out of time because this is a topic that I want us to adequately flesh out because I know that a lot of tenants often feel I'll say disempowered or don't quite know how to then go about it in the event where they do want to end their lease agreement early and the reality in both of us know this one so is that often tenants just don't read their lease agreements often landlords themselves don't you know read the lease agreements typically will download them from the internet and sometimes even when they use one that the TPN lease even when they use that they still haven't actually gone through the whole lease agreement to understand every clause that is there so we know that both parties are guilty of not reading the lease agreement and so really getting a good sense then of how can a tenant be able to get out of a lease early and and not pay you know the early cancellation amount or certainly try to pay as little as possible and using the legal and this to be able to do so but that's going to be a conversation that you and I are going to pick up on on another day before I let you go then so now I think any final tips for both landlords and tenants when it comes to using the recovery the recovery pack especially right now and knowing that we don't have an end date to you know the national state of disaster and every there's been so many different types of crises that have unfortunately happened and will say to us you know being in a pandemic and of course the economic effects so even part of what we saw you know last week we could also say that the fact that it's during COVID certainly played a role in things getting to where they are so knowing that we're likely still going to be facing financial difficulty in particular any final tips for both landlord and the tenant and how they can both certainly best use the rental recovery pack I'm so glad if every time somebody asks me this question I get so excited if I can use the word Ubuntu in any conversation I am a very happy camper so Ubuntu I don't think we ever let me say anything and I don't sneak in Ubuntu the reason why I'm such a such an absolute fan of application of Ubuntu in our law and specifically in rentals is in a case like this where we are now and it's not a short thing we've been in this for 18 months and like you rightly said it leads to further things and difficult times and things are happening people need to appreciate whether you're a landlord or a tenant everybody in this transaction is human if there's a company there's a human behind that company if it's a trust whatever the case is we are people and we are people in one community we share a community so for tenants to say I don't want to pay my rent because I can't so the landlord must carry me financially it's really not fair because the landlord also has obligations to me other way a landlord that says well you know what I can get this rental income and my tenant must make a plan and that's also not ideal although legally enforceable and although it's correct in law in practice we are going through a time that our generation has never gone this is not the first time this happens in the history of the world there's everything that you know that's happening as happened before and you know nothing is really new but it's our generation's first time of going through a very difficult thing and as long as landlords and tenants remember to communicate communicate, communicate and don't communicate tenants please don't communicate when the poor boy is in the fan that's a little too late communicate when you realize oh whoa the poor boy is heading towards the fan this is again my amazing legal terminology so when you realize there's a problem and you're gonna run into a situation if you're a business owner and you're a tenant and you can see your business is failing open the conversation with the landlord then because if you start talking to each other before there's a real rental both parties are still happy to talk to each other if you're on month three of not paying your rent I promise you the landlord doesn't feel very you know happy to help you talk in advance and if you then come to a conclusion use an agreement use something like the rent recovery pack to do a deferred payment use the TPN yeast pack documentation use the addendums and the acknowledgments of that to record your agreement in writing and if all else fails cancel the agreement but give the landlord sufficient notice and then landlord you need to mitigate your damages there's a legal obligation on you to start marketing the property immediately if it's necessary even reduce the rent because if you're in a complex where the rent went from 65,000 for a month to 42,000 for a month for all their units if you're still trying to get your 65 I'm exaggerating obviously but if you're still trying to get that rent but everybody else in the complex have dropped their rent and you're not mitigating your damages if you reduced your rent obviously that rent reduction would be part of the early cancellation penalty and the damages suffered by the landlord but you need to communicate as quickly as possible and talk to each other try to avoid the very short WhatsApp actually pick up the phone talk to each other and see if you can find the solution and that's such a great place to leave it on that's a great note to leave it on so that this evening that you really want to meet each other halfway as much as possible if you're the landlord and your tenant has come forward saying that listen I know I likely won't be able to pay in future rather you know cancel let's say two months time so I'll still pay the next two months rental but I'd rather for the sake of my finances end the lease agreement in time get into sourcing a new tenant as opposed to trying to be unreasonable with them and I think from the tenant side as well is you want to be as forthcoming as possible during this period I know that it's such a difficult one beyond some of the anxiety and the stresses of living in South Africa and not being vaccinated because I'm seeing a I'm very jealous I'm seeing a lot of friends abroad who are my age they were long vaccinated then when we add all of those collective stresses there's also of course just the burden of how all of this is also taking the toll on our mental health so you really just want to be forthcoming as early as possible and also get into gear mode in terms of solving it for yourself and finding that cheaper place and moving in there as soon as possible because I think it is one of those things that right now a lot of us are trying to find different ways to cut costs as much as possible and in the event where we're able to make a little bit extra money put it aside because we don't know if things are going to get bad at all but so now we are going to leave it there this evening thank you so much for joining us it's always such a pleasure to have you on the show thank you so much for having me so much and we're always a pleasure to be with you and that is Solis Stain who is the managing director at SSLR Incorporated and that is the end of the Wednesday edition of the private property podcast with myself Uzaman Dunwa Malo I'll be back on your screens tomorrow evening at 7pm it is a Wednesday so you can look forward to the first-time home buy show with SD Croson at 8pm until then hope you stay home and stay safe I'm Brian Kappa I'm a 10-time South African motorcycling champion my family and I have chosen to live in four ways there's some really great suburbs in our neighborhood there's a lot of families living in the surrounding areas in places like Lone Hill and Cedar Lakes what draws people to Cedar Lakes is that it's so close to Broadacre Shopping Centre Cedar Square and Four Ways Life Hospital Lone Hill is a major draw card for many families it's got some great smaller commercial centres and some fantastic schools like Crawford College from an entertainment point of view Montecassino really comes alive at night there's so much on the go and there's an incredible energy in the area our family just loves the fast paced lifestyle that Four Ways brings but honestly the thing that attracted us most to this area was the active lifestyle that it offers as a family we've chosen to live in Four Ways because of the lifestyle and convenience and this is our neighborhood