17 January 2008 by

Recouping costs incurred by the leasing agent

Leasing agents who have previously been recouping their fees directly from tenants, may be surprised by the recent amendment to the Rental Housing Act 50 of 1999. Section 5(3)(p) of the Rental Housing Amendment Act 43 of 2007 provides that:

"any costs in relation to contract of lease shall only be payable by the tenant upon proof of factual expenditure by the landlord".

However, costs in relation to lease agreements are not always expenditures of the landlord per se.

Leasing agents regularly charge fees directly to a tenant for the preparation of lease agreements. This corresponds with a common provision in lease agreements that the tenant shall pay the costs thereof. However, fees charged in such a manner would not amount to "expenditure by the landlord" as is now required by section 5(3)(p) of the Rental Housing Amendment Act 43 of 2007 and would therefore not be payable by the tenant.

To remedy the above situation, leasing agents must address their invoices directly to landlords instead of the tenant. This invoice would then constitute "proof of factual expenditure by the landlord" and would thus be payable by the tenant.

This change is of practical importance if leasing agents wish to avoid non-payment of fees by tenants who claim that they require proof of factual expenditure by the landlord.

Simóne Franks and Zahrah Ramjan

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