The responsibilities all landlords face

BEING a landlord entails far more than collecting rental. Adrian Goslett, CEO of RE/MAX of Southern Africa considers the numerous responsibilities landlords face, and offers some advice to simplify and streamline the experience.

Buy-to-let property investment continues to be an important component of a well-diversified investment portfolio.

The 2010 World Wealth Report by Capgemini Global Wealth Management and Merrill Lynch showed that the world’s population of high net worth individuals hold as much as 48% of their wealth in residential real estate.

“Owning rental properties can certainly play an important role in securing financial independence, but prospective landlords should be aware that owning a rental property entails more responsibility than simply collecting rental,” explains Goslett.

He adds that renting out a property is a business, and as such, it should be managed like one.

“Being a successful landlord requires a professional approach to managing the property, the tenant, the administration and the financial side of the business,” says Goslett.

As with any other business activity, property rentals are regulated by law and it is crucial that landlords understand the legislation applicable, which sets out the rights and obligations of both the landlord and the tenant. Two pieces of legislation are of particular importance to residential landlords: the Prevention of Illegal Eviction Act (PIE) and the Rental Housing Act 50 of 1999 (RHA).

The PIE Act protects tenants from unlawful eviction, but also details procedures for landlords in dealing with errant tenants and for evicting unlawful occupiers.

The RHA regulates the rights and obligations of both landlords and tenants, details how disputes between tenants and landlords must be legally dealt with and provides general requirements relating to lease agreements. It further makes provision for Rental Housing Tribunals in each province, which offer a free dispute settlement service for tenants and landlords, as well as advice on issues related to residential leases and rentals.

Once a tenant has been selected, both parties must agree on the terms and conditions of the lease agreement, which should detail the issues stipulated by the legislation, such as the deposit amount, the monthly rental amount, the due date for payment and how it will be paid, as well as the duration of the lease and renewal terms, among others.

In addition to managing the tenant, landlords are also responsible for the upkeep of the property.

The financial and administration side of the business must also be managed. The rent and other charges, such as levies and water and electricity charges must be collected and records of all transactions must be kept for tax purposes.

Landlords are also advised to accumulate a cash reserve for unforeseen repairs and maintenance, as well as for a potential vacancy at the property.