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Can’t pay rent? This is what you should do

By Isabelle Coetzee

We all face challenging circumstances at times. For many of us, this may mean we’re unable to afford the basket of goods we usually purchase each month, and for others this 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 what you can do in these circumstances.

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What to do if you can’t pay rent

According to Simon Stockley, co-founder and former chief executive 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 rental 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 – but don’t avoid the issue. 

“Engaging in dialogue should always be your first option. Landlords are human – they have emotions and (generally) do listen to reason,” says Stockley.

According to Kevin Chetty, director at Xtenda Housing Finance, the best way for a tenant to approach an inability to pay rent is to schedule a phone call with your landlord or the rental agency. He recommends the following: 

  • Explain your current employment circumstances.
  • Emphasise that whilst you where gainfully employed, your rent was paid on time. 
  • Always submit a written response after meeting with your landlord or rental agency. 
  • Try to negotiate a smaller amount at best or reprieve at worst. But, you must explain how you will catch up.
  • Tenants must respect the rights of the landlord in terms of settling the outstanding payments on rent due when they are able too. 
  • Having a good relationship with a landlord or rental company is always important. 
  • Landlords, must also consider the difficulty face globally and in South Africa. 

Are landlords or agencies more lenient?

According to Jan Davel, CEO of PayProp SA, there’s a lot of talk about landlords being more empathetic and flexible towards tenants. However, he points out that if there has been no change in the contractual parties' rights and obligations, then they’re 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 seriously entered into 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 – it can, and when necessary, it must be renegotiated.

Stockley prefers a direct negotiation between landlord and tenant, without third parties misinterpreting intentions and creating opportunities for conflict. Although, he adds that this can create additional emotional stress in having to deal with a potentially angry landlord.

Sometimes a landlord appoints a managing agent, who has been contracted to collect rental on the landlord’s behalf. Here you will be obliged to negotiate through the appointed agent.

“In all circumstances, but even more so when dealing through an agent, it’s important to keep notes of all discussions and to confirm any changes agreed on or variations to the agreement in writing, so that you can refer to these later if required,” says Stockley.

What if your flatmate defaults rent?

According to Stockley, the obligation to pay the full rental rests with the person named in the lease and the default of a flatmate doesn’t absolve the tenant of the obligation to pay the full rental due to the landlord.

“You have a separate and distinct contractual obligation with your flatmate which, unless it is specifically recorded in the main lease agreement, does not affect it or change depending on the performance of a flatmate,” says Stockley.

He explains that if your flatmate defaults, communication is key. He suggests you immediately notify your landlord and endeavour to negotiate a rent reduction, rental holiday, or a deferral of rental, until the situation normalises.

“Don’t stick your head in the sand; all that it achieves is a restricted airflow and will not magically make missing rent appear,” urges Stockley.

READ MORE: Can banks reject your home loan because of “undesirable” location?

Can you be thrown out if you’re not allowed outside?

During extraordinary circumstances, such as the national lockdown during the Covid-19 outbreak, will your landlord be allowed to throw you out? 

“Only in the event that national government publishes a general law amendment act, which suspends or alters the normal operation of the law, will this be prohibited,” says Stockley.

He explains that these can be enacted in situations of grave national crisis, such as drought, war, or pandemic, and are considered so rare and out of the normal they are referred to as “black swan events”.

During the Coronavirus pandemic, South African government appealed to landlords not to go ahead with evictions.

What should landlords do?

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.

He outlines the following tips for landlords who realise their tenants cannot meet their rental obligations:  

  1. 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 respective financial institution to instate 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.
  2. 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.
  3. 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 if feasible. Finding good tenants is not easy – especially in this economy.

Tip: You can start looking for your dream home today. Click here to get a home loan.

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