Frequently asked questions – The Landlord, the Lease and the Consumer Protection Act
Content provided by a guest contributor.
The content was kindly provided by M. Prem Inc – Specialists in business law ©
How much notice do I need to give my landlord if I want to terminate my lease agreement?
It is not uncommon for landlords to insist on fixed-term agreements when the Consumer Protection Act (CPA) may apply.
- In terms of the CPA if you are an individual (natural, not juristic), then as a tenant you may cancel the lease agreement after giving 20 business days’ notice in writing to the landlord. Irrespective of the reason for the cancellation, the tenant remains liable to the landlord for any amounts owed in terms of that agreement up to the date of cancellation.
- A lease agreement extending for a period of 24 months is seen as a “fixed term” agreement. Fixed term agreements are covered under s14 of the Consumer Protection Act (CPA) and do not apply to transactions between two juristic persons [(Pty) Ltd or CC] regardless of annual turnover/asset value. Therefore the Act applies to juristic persons contracting with individuals as well as two contracting individuals.
If I terminate my lease agreement by providing 20 business days’ notice to my landlord, are they entitled to hold back my security deposit?
Yes, they are. The landlord can claim a reasonable cancellation penalty for the cancellation of the lease agreement. The amount relates to the possible loss the landlord may suffer if you exit the lease agreement before the expiry date.
The CPA does not tell us how this amount is calculated. Regulation 5 (2) of the CPA describes the criteria that must be taken into account when determining a “reasonable cancellation fee”. These include:
- The amount which the tenant is still liable for to the landlord up to the date of cancellation;
- The value of the lease agreement up to cancellation;
- The reasonable potential for the landlord, acting diligently, to find another tenant between the time of receiving the cancellation notice and the time of the cancelled reservation; and
- The general practice of the relevant industry.
The CPA states that the landlord cannot charge a cancellation fee which would have the effect of denying the tenant the right to cancel the lease agreement.
The general practice seems to be that the landlord is entitled to hold back your security deposit, which is equal to 1 month’s rent.
The main objective of the CPA is to protect the consumer by promoting fair, accessible and sustainable trading. This can only be achieved if the suppliers and consumers are equally aware of their rights, duties and obligations. Know your rights.
- Right to equality in the consumer market and protection against discriminatory marketing practices
- Right to privacy
- Right to choose
- Right to disclosure of information
- Right to fair and honest dealing
- Right to fair, just and reasonable terms and conditions
- Right to fair value, good quality and safety
- Right to accountability from suppliers
To know more about M.Prem Inc’s services, contact them:
Telephone 011 468 1579 or 011 468 1797