Can High Rent Increases Be Illegal in South Africa?
Raising rentals within acceptable terms is always a delicate issue for landlords – as rentals achieved are determined by demand and supply dynamics, and are dependent on area, property types and even the state of the national economy.
In recent years landlords have faced “cost inflationary forces” beyond their control such as high interest rates. These pressures often necessitate rent increases, not simply to increase profits, but to cover rising costs. Other inflationary pressures include increased municipal charges, operating expenses, and property rates.
Generally, landlords are reluctant to burden tenants financially, especially those who pay on time, respectful the property, and are trustworthy. However, a rent increase is often preferable to selling the property, regardless of the tenant's reliability.
South African rental laws protect both landlords and tenants. However, landlords unfamiliar with these laws may attempt unlawful rent increases which can strain on tenants financially and lead to legal disputes between the landlord and tenant.
What is an Unlawful Rent Increase?
Rent increases cannot be arbitrary. Unless the lease agreement includes a specific clause outlining the landlord's right to increase rent, and specifies when and by how much, the rent should remain constant throughout the lease term.
An unlawful rent increase occurs when a landlord increases the rent beyond the legal limit, without proper notice or justification.
In addition, landlords cannot increase the rent to an amount exceeding the market-related price. The Consumer Protection Act offers some protection to tenants, stipulating that any rent increase, regardless of timing, must be reasonable and fair. A market-related price is the amount a reasonable person would pay for comparable rental properties in the same area.
Notice Requirements for Rent Increase
If the lease agreement permits rent increases, the landlord must provide written notice to the tenant at least one month before the increase takes effect. The notice must include the new rental amount, the effective date, and the reason for the increase. If the increase is due to renovations or improvements to the rental property, the landlord must provide evidence of the expenses incurred.
South African tenancy law, shaped by the Rental Housing Act 50 of 1999, the Consumer Protection Act 68 of 2008 (CPA), and the Constitution of the Republic of South Africa, 1996, emphasises fairness, equality, and clarity in contractual dealings. Although landlords typically retain the right to increase rent at various intervals during the lease or upon renewal, this power does not allow them to implement an increased rent without notice.
If a landlord does not provide the required notice, the tenant can refuse to pay the increased amount until proper notice is given. The tenant can also approach the Rental Housing Tribunal to seek legal intervention.
Can Rent Be Increased During The Lease Period?
No, a landlord in South Africa cannot increase the rent during the term of a fixed-term lease unless the lease agreement specifically allows for such an increase.
The ability to increase rent during a lease term is strictly regulated and depends heavily on the lease agreement's terms. According to the CPA, any increase during a fixed-term lease must be explicitly detailed in the contract at the time of signing. For example, the agreement might state a 5% increase after the first six months. If such a clause exists, the landlord is legally entitled to implement the specified increase.
However, if the lease does not include a specific clause that allows for an increase, then the rent amount should remain constant throughout the term of the lease.
Challenging an Unlawful Rent Increase
A tenant who believes a rent increase is unlawful can challenge it. The first step is to attempt resolution with the landlord through negotiation. If this fails, the tenant can approach the Rental Housing Tribunal for assistance.
The Rental Housing Tribunal provides a free service to resolve disputes between landlords and tenants. It can investigate and determine the legality of the rent increase. If the tribunal finds the increase unlawful, it can order the landlord to reduce the rent to the previous amount or a reasonable amount. The tribunal can also award compensation to the tenant for any damages suffered.
If the tenant is dissatisfied with the tribunal's decision, they can pursue legal action in court, but at their own expense. Legal action can be costly, and tenants should consider this before proceeding.
Penalties for Unlawful Rent Increases
A landlord who increases the rent unlawfully can be liable for penalties. The Rental Housing Act stipulates that a landlord who increases the rent above the legal limit is guilty of an offence and can be fined or imprisoned for up to two years. The tenant can also claim compensation for any damages suffered because of the unlawful rent increase.
Rental Housing Tribunal & Legal Representation
Unlawful rent increases can cause financial strain on tenants and create legal disputes between landlords and tenants. It is important for landlords to understand the rental laws in South Africa and to comply with the legal requirements when increasing the rent. Tenants should be aware of their rights and the legal options available to them if they believe that the rent increase is unlawful.
Although the Rental Housing Tribunal does provide a free service that can assist in resolving disputes between landlords and tenants, legal representation by an attorney is often the best route to take when facing such issues.
Best Practices To Manage Potential Rental Increases Conflict Between Landlord and Tenant
- The lease should include a clause allowing the landlord to recover indirect operating expenses proportionally from the tenant, as well as pass on increases in property rates.
- Renewal options in the lease agreement should not be one-sided, i.e., exclusively granting the tenant the right to renew.
- Consider including a clause stipulating a specific percentage (typically inflation-related) for the annual rental increase at the end of a period (e.g., twelve months). While not fully binding and subject to renegotiation, this clause establishes a benchmark.