Buyer’s Market, Landlord’s Rights and Eviction Procedures: A COVID-19 UPDATE

Despite the South African economy having been compromised pre-COVID-19, it is unequivocally apparent that the economic consequences of this pandemic will cripple our economic growth for many years to come.

As more businesses begin to shut their doors permanently, and thousands of South Africans continue to fight for job security, the property market has also taken a few hard blows.

LANDLORDS AND TENANTS

The lockdown measures have had a massive knock on effect, and the landlord and tenant dynamic most certainly were not spared. Due to the negative financial impact, many landlords have been faced with tenants not being able to pay their full rent, or in some cases, no rent at all.

In the spirit of ubuntu, many landlords have opted to assist their distressed tenants with some form of financial relief, a standard which has been broadly adopted throughout the country. However, not everyone can afford this grace, especially landlords who rely on rental income as a source of revenue. Sadly, there has been an influx of tenants electing not to pay rent at all, with the mindset that landlords are unable to institute any legal proceedings and/or eviction proceedings against them during the lockdown.

In terms of the regulations promulgated under the Disaster Management Act 57 of 2002 for Alert Levels 5 to 3, a blanket prohibition has been placed on the eviction of a person from his land or home. A competent court however may grant an order for the eviction of a person from his land or home in terms of the Extension of Security Act 62 of 1997, as well as the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998, provided that the order for eviction is stayed and suspended until the last day of the Alert Level 3 period, unless a court decides that it is not just and equitable to stay and suspend the order until the last day of the Alert Level 3 period.

The courts however adopted the approach to not hear any eviction application matters under Alert Levels 5 and 4 due to the fact that the order could not be executed in accordance with the regulations and in furtherance important role players, such as the Sheriff of the Court, were restricted from operating. This approach has however been reconsidered by the Courts, due to the large number of defaulting tenants and resultantly, eviction applications are now being attended to. In addition, a landlord is able to also institute action proceedings against the tenant for any/all damages which includes arrears rental.

The eviction process can become lengthy and ominous, with unopposed matters normally taking up to three months from date of instituting the proceedings to date of obtaining an eviction order. Landlords are therefore implored to commence proceedings sooner rather than later to mitigate their damages, as it is expected that the Courts will become inundated with eviction matters due to the economic impact of COVID-19.

THE PROPERTY MARKET

As the old saying goes – every cloud has a silver lining – and amidst the adverse effects of COVID-19, this rings true for the property market, especially for buyers.

With interest rates currently at a record low, the property market has become more lucrative, especially for first-time buyers with the market now offering more favourable buying conditions than it has for many years. Banks have furthermore become more lenient in granting home loans which is supported by the statistics showing the recent upward tick in home loan approvals.

It is undoubtedly so, that many property owners who have held onto their properties with the belief that a better offer will come along, will now be forced to lower their price (in some cases significantly), as the property market will become flooded with distressed sellers due to the financial impact of the COVID-19 pandemic.

Despite the thriving conditions for the property market and the economic growth of our beloved country, there has been some controversy at the Cape Town Deeds Office, which is a fundamental role player in all property transactions within its jurisdiction. Notwithstanding the fact that all Deeds Offices were allowed to operate in Alert Level 4, the Cape Town Deeds Office buckled under the pressure, which has caused a staggering backlog of approximately 20 000 transactions.

In June 2020, an urgent application was brought in the Western Cape High Court by the Cape Town Attorneys Association, the Tygerberg Attorneys Association and the Institute of Estate Agents of South Africa, to inter alia order the Cape Town Deeds Office to reopen and to develop, publish and implement a rapid and effective intervention plan aimed at addressing the backlog. The Western Cape High Court granted the order on 19 June 2020 and since then the Cape Town Deeds Office has started addressing the backlog and implementing the required measures.

Would-be Sellers and Buyers should not be discouraged under the circumstances, as positive progress has been made by the Cape Town Deeds Office. We have been reassured that they are attending to the backlog with the necessary urgency.

For all your property questions, concerns or legal advice, please contact us for more information on info@vwhattorneys.co.za

By | 2020-07-16T22:38:29+02:00 July 16th, 2020|Case Studies|0 Comments
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