We all face challenging circumstances. For some of us, this may mean we’re unable to afford the basket of goods we usually purchase each month, and for others it may be as drastic as being unable to pay rent.
So, what should you do if you find yourself in the latter category? We got in touch with some industry experts to find out.
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What to do if you can’t pay your rent
According to Simon Stockley, co-founder of SA Home Loans (SAHL), you should always make an effort to talk to your landlord.
“Negotiation is always better than non-payment. Perhaps agree to a partial rent deferral or a reduction in the rent due, even if only in the short term,” says Stockley.
He recommends being honest and forthright, taking your landlord into your confidence, and negotiating a payment you can afford.
“Engaging in dialogue should always be your first option. Landlords are human - they have emotions and (generally) do listen to reason,” says Stockley.
Kevin Chetty, director at Xtenda Housing Finance, agrees, and notes that the best approach is to schedule a phone call with your landlord or rental agency.
If you cannot pay rent you should speak to your Landlord and have the following conversation:
- Explain your current circumstances.
- Emphasise that, prior to your current financial difficulties, your rent was paid on time.
- Try to negotiate a smaller amount or a reprieve. Be ready to explain how you will catch up.
Tenants must respect the rights of landlords by settling the outstanding payments on rent due, when they are able to.
Landlords, in turn, must consider the difficulties faced in South Africa, and globally. - Always submit a written response after meeting with your landlord or rental agency.
- Maintain a good relationship with your landlord or agency.
Landlords or agencies - who is more lenient?
According to Jan Davel, CEO of PayProp SA, there’s a lot of talk about landlords being more empathic and flexible towards tenants. However, he points out that if there has been no change in the contractual parties' rights and obligations, they are not obliged to be lenient.
“The Roman-Dutch principle, pacta sunt servanda – which means sanctity of contract or agreements must be kept – is still applicable, even during difficult or unpredictable times. This means that agreements must be honoured, regardless of whether it’s through the landlord or an agent,” says Davel.
However, he adds that it doesn't mean the contractual terms can’t be renegotiated. They can - and when necessary, must - be renegotiated.
Stockley prefers a direct negotiation between landlord and tenant, without third parties who can misinterpret intentions and create opportunities for conflict. Although, he adds, having to deal with a potentially angry landlord can create additional emotional stress.
Sometimes a landlord appoints a managing agent to collect rent on their behalf. Here you will be obliged to negotiate through the appointed agent.
“In all circumstances, but even more so when dealing with an agent, it’s important to keep notes of all discussions, and to confirm any changes agreed, or variations to the agreement, in writing, so that you can refer to these later if required,” says Stockley.
What if your flatmate defaults on rent payments?
According to Stockley, the obligation to pay full rent rests with the person named in the lease. The default of a flatmate doesn’t absolve the tenant of the obligation to pay the full amount due to the landlord.
“You have a separate and distinct contractual obligation with your flatmate, and unless it is specifically recorded in the main lease agreement, the performance of a flatmate does not affect or change the lease agreement,” says Stockley.
He explains that if your flatmate defaults, communication is key. He suggests that you immediately notify your landlord and endeavour to negotiate a rent reduction, a rental holiday, or a deferral of rent, until the situation normalises.
“Don’t stick your head in the sand. All that this achieves is restricted airflow, and it will not magically make missing rent appear,” urges Stockley.
Can a national crisis prevent you from being thrown out?
Stockley says, “Only in the event that national government publishes a general law amendment act, which suspends or alters the normal operation of the law, will eviction be prohibited.”
He explains that such laws can be enacted in situations of grave national crisis, such as drought, war, or a pandemic, and are considered so rare and out of the ordinary they are referred to as “black swan events.”
At the outset of the Covid pandemic, the South African government appealed to landlords not to go ahead with evictions.
What should landlords do when tenants can't pay rent?
According to Grant Smee, founder of EPiC and managing director for Only Realty, a compromise should be reached in the form of a private agreement.
“Each relationship is unique, and this truly is a time for paying it forward. I would encourage landlords with good tenants to come to a compromise if needs be,” says Smee.
Tips for landlords who realise their tenants cannot meet their rental obligations:
- Communicate and be upfront. Find out how much the tenant can pay for the time being. Try to secure a partial payment during this time for your own security and, if needs be, contact your financial institution to enact a payment holiday. Once you know how much the tenant can pay, ensure they understand that this is a deferred payment to be settled at a later date, as part of a payment plan or a once-off.
- Compliance - put everything in writing. Any variation to the existing lease agreement must be clearly documented in writing for both parties. Keep track of all debt repayments via a monthly statement. Where possible, do not use the tenant’s deposit to cover rental shortfalls during this period. This is strictly for any damages and to secure yourself in the long run.
- Be compassionate. This is not an easy time for anyone, but landlords with good tenants should really consider coming to the party if necessary and feasible. Finding good tenants is not easy – especially in this economy.