Five legal tips to help property professionals and investors avoid rental disputes

South Africa’s rental market is thriving, but investors still need to be aware of the legal risks that can impact even the most experienced landlords and property practitioners.

Unpaid rent, damaged properties and contested deposits are among the most common challenges. Getting the legal processes around them wrong can mean drawn-out disputes, lost income, and legal battles.  

At a recent PayProp Masterclass, guest legal expert Johan de Bod from Koegelenberg Attorneys (KGB) and PayProp’s Sarah Fourie unpacked some of the most common legal challenges and explained how property professionals can address them with confidence, assured legal compliance, and clarity.  

Outcomes from the session included the following five essential legal tips for rental professionals.

Your lease is your first line of defence

Every tenancy starts with a lease agreement, but not all of them are worth the paper they are written on. Incomplete, badly worded or non-compliant lease terms can all leave landlords and tenants without the legal protection they thought they had.

“A weak lease is one of the fastest ways to end up in legal hot water,” said De Bod. “Too many landlords rely on incomplete or outdated leases.”  

Clear clauses on maintenance responsibilities, alterations and deposits can prevent disputes with the benefit of certainty for both ‘sides’. However, they must align with the Rental Housing Act and the Consumer Protection Act. If a term of the lease conflicts with the law, the law wins.

“A strong, compliant lease agreement doesn’t just protect the landlord, it also creates clarity for tenants. That clarity is often what prevents disputes from escalating,” De Bod added.

Manage arrears confidently with a proper Letter of Demand

A legally compliant Letter of Demand, served to the correct address as per the lease, is the first step towards recovering arrears through the courts when all else fails. (Proactive rent-due / overdue notifications, compliant reminders and sound debt recovery processes are all good and fair measures to avoid legal disputes). Tenants must be given a formal, legally compliant notice to repay their debt – a WhatsApp message or other informal reminder won’t cut it in court.  

Landlords must also comply with broader legislation. “The Consumer Protection Act gives tenants 20 business days to remedy a breach [non-payment or other failure to comply with the lease agreement], even if your lease only specifies seven,” De Bod explained. “Failing to follow the Act’s notice periods can derail your eviction case before it begins.”

“PayProp users benefit from integrated legal tools,” added Fourie. “A Letter of Demand can be issued directly from the PayProp platform for just R125, with costs recoverable from tenants.” She said Koegelenberg Attorneys also offers PayProp users a fixed-fee eviction service starting from R18,500.00 (exclusive of VAT and disbursements), making it easier and more affordable to manage complex legal processes.

Address habitual late payers proactively – and fairly

Some tenants repeatedly pay just before the end of the notice period, creating endless cycles of default. While the landlord eventually gets their contractual rent, the delays can cause cashflow issues. This is especially serious if they are relying on rental income to cover their bond repayments.

Courts have confirmed that landlords can include fair early termination clauses in the lease agreement for reasons including the landlord’s right to reoccupy their property, as long as they follow the correct legal process. According to De Bod, landlords should consider incorporating repeat breach clauses that give rise to a right of early termination, opting for shorter lease terms, or avoiding automatic renewals. These measures provide greater flexibility in dealing with habitual late payers.  However, he cautions that the specific approach of inserting a general right of early termination for landlords has not yet been tested in our courts. It remains to be seen how courts will approach the inclusion and exercise of such provisions in practice.  

Tenants, in turn, should carefully consider the implications of agreeing to an early termination right in advance and must be given fair warning and an opportunity to respond. Overall, it provides certainty and fairness to all parties.

It’s also worth knowing that under the Consumer Protection Act, tenants too may end a fixed-term lease early with 20 business days’ notice. Landlords may charge a reasonable cancellation penalty, but that penalty can only reflect actual losses, like advertising costs and one month’s lost rent – not the balance of the entire lease.

Don’t skip inspections

Both incoming and outgoing inspections are a legal requirement of residential leases. Because all deductions have to be supported with evidence, skipping an inspection can automatically entitle the tenant to a full deposit refund even if the property is damaged. Joint inspections, supported by date-stamped photos, videos and signed condition reports, can provide crucial evidence if required.  

Handle deposits correctly

Deposits must be invested in an interest-bearing account for the tenant’s benefit, and deductions can only be made to repair evidenced damages at the end of the lease. Landlords can only deduct unpaid rent, utilities, or damages beyond fair wear and tear. De Bod quoted an example of deep scratches on a wooden floor which would be deductible from the deposit, but faded paint or a single scuff on a wall is not grounds to repaint the entire property at the tenant’s expense.  

“It’s not just about holding deposits,” said Fourie from PayProp. “It’s about holding sufficient deposits. A deposit equal to one-and-a-half to two months’ rent is ideal, unless it’s not possible. Monitoring deposit pool health is essential to ensure landlords are protected.”

According to the most recent data from the PayProp Rental Index, the average damage deposit was 1.31 times the monthly rent, leaving 1.5 times the rent at the upper end of the scale.

Ultimately, to avoid rental disputes, landlords and property professionals must be proactive to ensure compliance with the strict rules for renting homes in South Africa.  

“A well-drafted lease, proper communication and respect for the law are non-negotiables. If landlords and property professionals get this right, they not only protect themselves legally, they also create a better rental experience for tenants.”