 I need to rely on good evening and welcome to episode 349 of the private property podcast. I'm your host, Uzama Douma Khumalo. It's the Monday edition of the private property podcast. If you're joining us for the first time, welcome to it. You are tuned into the early daily property podcast in South Africa, helping you on all your property needs. Now, it's been the long weekend. It's all our regular viewers on Facebook, Instagram, as well as on YouTube. Welcome back. I want to follow up from you. What did you get up to this long weekend? I know Matta Shingani held it down on Friday and of course kept you company. I actually had an opportunity to take a little bit of downtime, although I was actually working most of this weekend online. There's always another project. There's always another deadline and closing of quarter three is proving to be more hectic than I anticipated. But I want to find out from you at home, what did you get up to this long weekend? Maybe even did a DIY project. I know long weekends tend to be amazing for those. There's one that I'm kick-starting myself and I certainly want to hear from you at home. Now, as you know, we are running incredible competitions and we ran one over the long weekend. It was a really great heritage day competition that we ran on our Twitter. We're going to be announcing the lucky winners a little later on in the show and we asked you to give us what you think of the property or what the property means that we posted on our social media and we even said, look, you can't even respond in your mother time because we want you to be able to express what it means for you and I'll be sharing who the lucky winners are later on on the show. And we're also still running that incredible competition that is running on our Facebook page. That is of course the pinned post on Facebook where we want to see the comments for that particular post. We, of course, had a big goal of reaching 20,000 comments and every single weekday used a chance of walking away with that 500 grand cash. I'm going to wait for my colleague Viola to let me know how much is in the money bag actually. It'd be great to see if it rolled over. So I see we did have a roll over on Friday so we've got a thousand rands in the money bag so you can book away with that thousand rands. We'll see who the winner is. Remember you have to be watching us live in order to claim your prize while we are still on in order for you to walk away with the prize. So halfway through I'll let you know who the potentially lucky winner is and they need to drop us a text down here below. I hope it's one of you at home who are watching us on our Facebook page so that you can claim your prize. But this evening we're talking about something that I am very excited about and before I get ahead of myself you can see I took a long weekend. You're even forgetting to talk about the other great shows that you can look forward to at 8 p.m. here on Private Properties social media pages. It's a Monday so you can look forward to the home shoppers show that is with Chad and it also comes to your screens every Friday at the same time. And on Tuesdays and Thursdays you can catch on by Linoaco with the farming podcast tackling all things agriculture. And Wednesday's Esti Klassen brings you the first time home buyers show which is always in conversation with people who not only walked that journey but have gone on to grow their property portfolios from strength to strength. But those are the great shows that you can look forward to every single weekday at 8 p.m. I'm sure that many of you of course always watch I love the comments that you always hug do keep them coming and this evening I first want to find out from you what did you get up to this long weekend. I hope you've got some rest I saw there are so many weddings that were happening maybe you got married do let us know down here below. Well this evening we're talking about something that I you know I was saying to our guest that we haven't actually had a designated episode on this specifically I mean we're nearly 350 episodes into the show and this is the one topic we haven't dealt with for the whole half hour and we're going to be looking at understanding occupational rent. I think oftentimes many people who buy their properties encounter this thing called occupational rent and don't always know what it is so we're going to be looking at what is it what is not when does it come into play if ever and who do you pay it to if you opt for it and what are some of the do's and don'ts when it comes to occupational rent and my guest this evening is Silne Stain who's the managing director at SSLR Incorporated. Silne good evening and thank you so much for joining us on the show. Good evening so much and well thank you so much for having me again it's always so much fun to be with you. It's always such a pleasure to have you on the show Silne especially because we want to be able to best understand you know legal matters in an accessible way because this is one of those areas we always say to people you want to make sure you get an expert don't try to DIY this part and I think if anything we want viewers at home to at the very least understand the basics so you also know what questions to ask when you encounter this. So we look at occupational rent another good starting point is what is occupational rent? I think actually just to start the answer on that question I actually want to backtrack it even more and just break down the right of ownership so the right of ownership is something that is talked about quite often and I think a lot of people think they know exactly what the right of ownership is but because of the complexity of this particular right I think there's a lot of people that might not see the full picture of this right and I really hope if there's one thing I can leave your viewers with tonight is this true appreciation of the right of ownership so how I normally describe and explain this this very complex real right is by using the analogy of a bouquet of flowers now if I can get the viewers creative choices flowing I would like you to picture a bouquet of flowers not the well I think actually you know what Zama when you saw that there's a lot of different things happening in a bouquet of flowers you have all sorts of different flowers and there's things and and all of this together forms a unit but if you separate one of the flowers out of that bouquet it doesn't really change the true nature of what it is so the right of ownership is a real right a real right means this is something that attaches to a thing it's a very clear very simple right but that's multifaceted in the context of immovable property so the right of ownership gives you the right to trade with the property you can sell it you can destroy it within certain limitations you can't destroy your property if you are in the middle of a high-rise building you should really they not destroy your property but when you are and when you have a property where it can be done you have the right to demolish that property and rebuild you have the right to use it as security but then one of the rights that you have as part of the right of ownership is the right of occupation and this right if we if we go back to the analogy of the bouquet of flowers if you take one of the roses out of a bouquet of flowers you're not going to destroy the bouquet of flowers but you can trade with this separately when you're renting a property out you don't have to get the tenants consent to extend your bond you don't have to get your tenants consent to paint the property obviously you need to talk to them about what's convenient for them because they have the understood use and enjoyment of the property but it's completely separate to the same level where if you for instance if you're a tenant and the landlord in that property wants to get a bond the property isn't bonded you're not going to it's not going to affect you in any way because the one right being the right to use the property as security compared to the right of occupation isn't attached to each other close enough to limit either one of the two rights and so it's a very important thing to understand and the right of occupation is very often traded completely outside of the actual right of ownership in the sense that if you sell the property we have a principle in law called hir haad fir kuwap which says when you sell the property and there's a lease agreement in place on transfer the purchases steps into the shoes of the seller and becomes the landlord that happens automatically and why this is relevant to the context of occupational rent is the parties in a sales agreement can agree on when the right of occupation will transfer because it's a right that can be traded with separately from the right of full ownership the purchaser would be allowed to get occupation of the premises prior to registration but he's going to have to pay for that or on the other hand the seller might retain the right of occupation post transfer and then he must pay occupational rate so the word occupational rent I must say even on my best day I won't be able to find a better word it's perfect because you are paying for the right of occupation yeah and I like the long answer so I think it depends a really good picture in understanding where certain you know things fit and and I like how you describe it as it it's outside of the right of you know of occupation so we know that you're able to you know transact with this particular property and sometimes transfer can even happen but this rental is then you know it has to do with who is occupying the place so if it's the buyer for instance and we'll get to that shortly then they're the ones who you know pay the the rental and sometimes as you've rightfully you know put out you know the the transfer can happen and the the previous owner because they would now be the previous owner or the seller is still in occupation so then they'd be the one that effectively you know pays it and and I think let's look at them who pays it in in what circumstances because I think a lot of people who may have been familiar with it may have thought it's only the buyer who would you know pay occupational rent as opposed to also realizing that wait a minute you know if if you're selling a property and it transfers let's say on the 15th and you know that as the seller you're only going to have your following place of residence ready on the first of the following month and you sort of ask that those last 15 days you stay there then you're the one who must pay the occupational rental and I had this issue with the property recently where I needed to make sure that everything is ready and you know for transfer because I wasn't staying in it there wasn't attention in it and didn't want to have you know any admin where it comes to occupational rent so who's paying what in which instance so now so actually it's a relatively simple answer the person with the right of occupation is entitled to payment of that right now that right of occupation is either already traded with so let's use a rental for example I am the owner of the property you buying the property from me I have a tenant in place the rent that's getting paid is due to me as the seller up to the point of transfer from that moment rent is due to you who is then the purchaser and then the owner of the property so if we take it back out of a rental context into purely occupational rent whoever is entitled to the right of occupation and that is the registered owner of the property is entitled to receive occupational rent so if the purchaser takes occupation prior to registration date the money that he has to pay to the owner of the property being the seller to occupy the premises and enjoy the right of occupation before the transfer took place the purchaser will have to pay the buyer will have to pay the seller occupational rent if the seller remains in occupation after transfer of the property then he is obliged to pay occupational rent to the purchaser so there isn't a standard seat one but the owner of the property is entitled to occupational rent or rent I am this evening in conversation with Solna Stain who's the managing director at SSLR Incorporated we're looking at understanding occupational rent and of course if you have any questions or comments when it comes to all things occupational rent you can send them down here below I also want to find out from your home what you've got up to over the long weekend we'll be going through those comments in a moment I want just to take a quick break and see who the potential lucky winner of that 1000 rents that is in the money bag is let's see who's going to walk away I hope they're watching so that they can claim their price lucky winner this evening is that is who is the potential winner of that 1000 rand cash prize I do hope that they're watching and once you're watching drop us a message down here below I've seen you in some of the lives that we've had so I know that you're one of the regulars on Facebook so do drop us a message down here below in order for you to claim your price and this evening as we're tackling all things occupational rent we also of course ran a great competition and I'll be announcing those lucky winners at the end of the show over the heritage day long weekend and we wanted to you know hear from you and of course you came through and answered a special on our Facebook page I'll be sharing the lucky winners as well as what they get to walk away with and of course taking your questions and comments on social on our Facebook page and we've got here a semi my heart is saying good evening fam yeah what a weekend it was the DIY the DIY for me was going all out making sure I get the roof in social Google house and ready for the rainy seasons is as the rainy season is upon us on Saturday morning I got the roof paint went to paint the roof and fix where it needed to be repaired and I did that from the help of some guys who are normally do who normally do DIY with me and we did it in a day after the after effects I was so tired on Sunday and tonight I have fully recovered and it's fully recovered and of course has is also now tuned in and I think that's such a big thing and one of the things about being a property investor or even a hope owner for that matter is understanding that there's certain maintenance work that you need to do we're approaching rainy season so if you didn't get to doing all the checking the gutters and making sure that that leaky roof has been fixed you want to do it now before rainy season start I know that that's something that I need to do in in some of the properties so thank you very much the semi it's actually a great reminder for me to speak to the team to make sure that we attend to that. Umeensi Buttelezzi commenting on the topic that we're exploring this evening that is of course understanding occupational rent saying I have to pay one month's occupational rent as a buy it helps get you ahead if you have cancelled your lease where you were renting and that is quite a big one right especially when the property that you're buying is in fact vacant and as opposed to if let's say the current tenant also has to wait until the end of the month when their lease is also up. Polina Nkosi on Facebook saying on on Friday at Matsulu we had an event for boys and girls teaching them about prep and Mateo was our local comedian was there of course sharing what she got up to over the long weekend. Now you know Sona I think when we look then at our at you know occupational rent we certainly have an understanding of you know what it is and under what circumstances it gets paid helps you know take us through the firstly the amount let's actually debunk the amount I think let's start there we will get to the nitty gritty of the OTT let's debunk the amount because I know I've seen it I get asked us quite a lot you know what is the the standard rate or the going rate or the legal rate many of us you know in the industry we use one percent but we know that that's not it's not written in stone anyway I perhaps demystify for us the the going rate for occupational rent yes so you you said it perfectly it's the going rate is one percent one percent of the purchase price so the truth of the matter is I think that one percent is just like sort of an industry thing where people started using that as more or less some sort guideline to how much you must be paying for occupational rent but the truth is occupational rent is no different in any way to rent and the reason why I'm saying this is payment of occupational rent or payment of rent where you are renting the property is simply reimbursing the owner for having the use and enjoyment of the right of occupation of that particular property so it's the exact same thing so the two value of your right of occupation is exactly what it would have been if it was a rental so that would have been my starting point if I have to calculate or decide on occupational rent if I had to rent this property out what would my monthly rent have been you can even reduce that thing to a daily rental amount but I mean from a month you can easily do a prorated calculation if the property transfers so you would typically look at your normal rent what you would have paid very often depending on the area that is more or less one percent of the purchase price but in some areas you might pay much more your your rent might be much more than one percent of the purchase price of the property because that is what rentals are in that particular area and then I would probably go more for the typical rent because this is what you are paying for you paying to use the right of occupation so so you can be guided by by either one one percent or the rent in the area but as everything else in a contract this is highly negotiable so say for instance the seller is desperate to start getting money in and the seller would be more than happy to have the occupant and the purchaser take occupation and deal with that right of occupation as he sees fit be it to personally occupy the place or to place a tenant in the property in the meantime which is a hundred percent allowed because the right of occupation doesn't mean you have to physically be in the property with your own stuff and body it can be you can then trade with that right when you have that right so if it is a situation where the seller is desperate to start getting some cash in the parties can negotiate negotiate for a lower but cash payment on a monthly basis to the seller up to the point of transfer or to the other side if the parties decide that the seller needs to be in occupation of the premises after transfer and the purchase says only going to say start doing renovations or what if the plan is with the property in six months from registration give or take and the seller doesn't have a lot of cash to pay for the occupational rent the parties can agree to reduce for instance the purchase price of the property and allow the seller to remain in occupation for say three months and they absorb that occupational rent in the reduction of purchase price you can trade with this right very creatively but just make sure when you do creative things with the right of occupation that you just chat to a property lawyer and and make sure you record it correctly so so typically occupational rent because you are paying for the right of occupation would be exactly the same number that you would be paying for a rental in that particular property I love the the point around make sure that you deal with the property lawyer because I think this is also one of those instances where if you're a property investor and we're even seeing this off air I've seen your different investors find creative ways when it comes to you know occupational rent especially when a transaction is relatively prolonged and they sort of structure that into their deal that registration is going to take slightly longer than perhaps two or three months and they almost build it into how the structure it deal so if you want to go about doing something like that you absolutely need to make sure that you speak to the right experts more of your questions and comments at home we've got a question here coming through on Facebook from asking if I buy a property where there is a new lease between a seller a tenant and a managing agent what happens to the rent do I automatically inherit the lease agreement and pay the managing agency or commission or it's strictly between the current owner and his arrangements and nothing to do with me the offer to purchase says the owner will make the property available upon registration the likes of you had to go often be all dramatic with this question and the big thing there is also that last point right where the owner asserts that the property is going to be available upon registration and yet there's a new lease agreement in place I want you I feel like the lights went off because of of how because this is one of those matches where the owner can't say something like that but and let's assume it's a fixed term lease agreement as opposed to a month to month because at least with the month to month it's easier to kind of you know navigate so let's make it a fixed term lease agreement oh my goodness my heart on that one I almost wanted to dim the lights on my side just for good measure and so like I like I said earlier I was talking about the principle of here hot for grip this happens by way of law there's no you don't need to do an attend them you don't have to change anything and that is pretty much sit in stone unless I will get to the unless no no let me just explain the right of um well that uh here hot for grip principle so here hot for grip as you can clearly yeah is a touch law principle so it's very important to to know about this principle because I think it very often ends up causing so much harder a campaign and if people just knew about it it it would have saved them a lot of time and effort here hot for grip if you translate it to English it basically says rent goes before purchase and what that means is your right of occupation that you've traded with as the owner of the property and you gave it away to a tenant in a form of a rental you can't just take that away even if the property is being sold you're selling the property with that lease agreement in place and you can't just cancel the lease agreement because you are selling the property what did this principle says and it's a very old Dutch law principle that's very well well um recorded in odd law is that it happens ex-legate by way of law the lease agreement transfers um even though the seller's name is still written in the landlord line the butcher's who's now the owner of the property becomes the landlord by way of law now the only way of cancelling that right of occupation is a if your lease agreement allows for it or in the context of a residential property then it's governed by um the rental housing at specifically section four five so not 45 four subsection five subsection c of the rental housing access that a landlord may cancel a lease agreement mid term so during the subsistence of the fixed term agreement but these two conditions do this the one is it has to be recorded in the lease agreement so for all the leaseback tpn leaseback readers out there i know exactly where this one sits clause 22.1 uh go have a look at that that's what we're dealing with there and the second requirement is that the reason why the landlord is cancelling the agreement may not constitute an unfair practice now specifically in the tpn leaseback lease we have drafted in only two reasons and only two grounds on which the landlord may cancel the the lease agreement in terms of section four five c and this is when the landlord wants to sell the property or when the landlord wants to take occupation of the property now there's um no conflict between the rental housing act and the principle of the interaction is actually quite interesting and just for the benefit of the reader summer i've done an article that's sitting on the sslr website specifically um going into details of this interaction between section four five c of the rental housing act and the principle of your hot work group because it's really important so in the case of this viewer's question if your lease agreement if the seller's lease agreement does have that provision so you are lucky and that landlord was clever enough to use the tpn leaseback they can give the 10 and two months written notice of termination of that lease agreement and that would be 100 legal if however for some weird reason the lease agreement does not contain this clause unfortunately section four five c of the rental housing act now tells us now the landlord can't cancel that lease agreement because of the interaction with section 14 of the consumer protection act which would now require the tenant to be in breach of a material term of the agreement to allow that the landlord to place the tenant on terms given 20 business days to remedy his bridge and only when he doesn't remedy his bridge would he be allowed to cancel other than that that lease agreement is proper in place so my recommendation is always to a purchaser if the seller says the property will be vacant but you know there's a tenant in there make sure that you get a copy of that lease agreement so you can look for yourself and see if the requirements of section four five c has been made so you can cancel the agreement as the landlord from transfer on certain time notice usually two months and then you can have occupation of the premises however if you can't cancel remember at least from the date of registration you're entitled to that rental income as the purchaser so you know all's not lost but the viewers question extended to the managing agent and actually also on our website I also have an article on specifically this apparently I write articles for Sunsys so a very important question there what happens to the mandate with the rate with the rental agent the managing agent in the form of rental now not managing agent on a sectional title very important that mandate agreement the management mandate agreement was only concluded between the landlord the previous owner and the agent and that right does not carry through with your hotwood group so that's what I always say to the rental agents that I train make sure you record your procurement so your placement commission quantify that in a specific number because even if the property is sold but the landlord was supposed to pay your placement commission over a certain period of time he's still secured in that payment but the management component of the mandate can't carry through sale and no managing agent no rental agent is allowed to contract to contract in the future so you can't contract with a party that's not even a party to the mandate agreement to compel them to keep you as the rental agent unfortunately that part of the agreement can in fact be cancelled and will automatically be cancelled on transfer and the purchaser can then continue with the procurement part of the agreement so so you maintain the tenant but the management element the purchaser can do himself or appoint another estate agent or if he's happy with this one mandate but now it's a new mandate agreement to continue with the remainder of the lease from the date of transfer and we've got a I'm going to squeeze this question in it's coming through from Rue Romano saying I recently purchased a property for 780 000 but my occupational rent I will be receiving from the seller is 7400 are there any deductibles for example commissions no your occupational rent is is completely separate from your purchase price even though it looks like it's sort of related to each other it's completely separate and so so that would be the price that the parties agreed to well so now we're going to leave it there this evening as we're running out of time I'm going to squeeze in the last comment there and that came through from semi-malances saying Zaman Dhoma is maintenance is something else but also preventing is the best so we don't lose too much money hashtag DIY guy and that's a very important one for all the property investors and of course homeowners you don't want all these costs to stack up and that's a very important thing so now I'm going to let you go thank you so much for joining us on the show thank you so much for having me and that is so necessary who's the managing director at SSLR incorporated it seems my lights are still on long weekend mode for for some you know for for some events I don't know why but well I'll forgive them I'll forgive the the on and off I think they're still in a party mood and of course before we wrap up we're going to be announcing lucky winners and I see that the lucky winner of that 1000 rand cash prize is indeed watching us live so once on my mail on senior congratulations you walk away so glad to kick start the Monday with a winner watching us live and of course able to walk away with that cash prize and we also have the other three lucky winners that we're announcing who entered the Heritage Day competition that we ran on Friday where we asked you to caption houses that were posted on our social media pages and we've selected three winners who are each going to walk away with 500 rand in cash I'm going to start with the entry that we've got on Twitter and on Twitter we've got a VK Manzoane VK Manzoane is saying and hashtag in my language so that definitely is the property of her dreams we've also got reporre on Facebook saying I'm really saying this is a beautiful dream house it has four rooms very beautiful inside and out and beautifully decorated and the main woodlands hills free estate I'm also using that hashtag my heritage my pride I love this entry it's coming through from that is such a beautiful surname I've actually never heard it as a surname before who responded also on our Facebook page they also walk away with that 500 rand in cash and they say I love that so that is on our Facebook page and you also walk away with that 500 rand in cash I think it's actually a great way to start off the dreaded Monday after a long weekend many of us tend to not like the Monday after a long weekend giving away lots of cash our lucky winner was watching a slide was able to claim that prize and of course the three lucky winners who entered on social media that certainly you're here to always make sure that you keep your fingers on the pulse follow us across our social media pages into the competitions you might be one of the lucky winners you can follow myself at zamantua underscore k on twitter and on instagram is always talking about all things relating to property and that's how I'm going to leave it and even my light is turning me I must leave it of course look forward to the home shoppers show with chat at 8 p.m I'll be back on your screens tomorrow evening at 8 until then hope you're staying home and staying safe