PROPERTY NEWS - A weak economy is a big boost for the rental market as renting tends to be cheaper than buying and is the only option for someone in a tough financial situation. But, according to Seeff Properties, people rent for a variety of reasons. Sometimes it is because they want to live in a more expensive suburb but will then buy elsewhere.
It is also popular for those looking to relocate to a new city or suburb.
Seeff expects the demand for rentals to rise notably over the coming months and says it may happen that you finally find a suitable rental, only to find that the owner decides to sell while your lease is still current.
In such instances, Seeff says that you should know that the owner is free to sell for whatever reason, subject to adherence to the important legal principle of "huur gaat voor koop", a Roman-Dutch legal principle which translates to "the lease trumps a later sale". This means that the tenant is entitled to remain in occupation of the property for the remainder of the lease period and on the same lease terms.
In some instances, this might actually be a selling point for investors looking to invest in a property with a good tenant in occupation. It however means that neither the seller nor the new landlord may cancel the lease due to the sale of the property. Only a breach by the tenant can result in the necessary action as prescribed by the lease agreement and law, but it cannot be as a consequence of the sale.
The new property owner will need to continue with the existing lease agreement until the expiry date and the rental cannot be increased. It may happen that the tenant sees this as a good time to cancel the lease and in such event, the tenant's right to cancel the lease will be determined by the lease agreement and law.
In some instances, the lease agreement may already provide the tenant with the option of cancelling the lease in the event of the sale of the property. In such event, there will be no cancellation penalties payable by the tenant.
The lease agreement will also regulate aspects such as "for sale" and "sold" signboards displayed on/at the property, as well as access to the property for viewings.
Once the lease period comes to an end, and provided that no new lease agreement is entered into with the new property owner, the tenant must vacate the property. Any rental deposit together with interest must also be transferred by the selling property owner to the new property owner to continue holding it in an interest-bearing account for the benefit of the tenant.
When the lease agreement ends, this should be refunded to the tenant, subject to the relevant legal rights and obligations.
It is vital that a new inspection of the property is done with the new owner to ensure that there is agreement on the condition of the property so that there will be no disputes at the end of the lease when the rent security deposit needs to be refunded to the tenant.
Finally, if you want to remain in the property as a tenant after your current lease expires, you will need to enter into a new agreement with the new owner and this will contain new terms and possibly a higher monthly rental. The new owner may also require you to top up the security deposit.
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