LEGAL
The Long and the Short of It
Making money with short-term rentals
BY CILNA STEYN
S
hort-term rentals are not the most popular form of
property investment in South Africa. This is even
more so for extremely short-term rentals like Airbnb.
One of the main concerns of investors is a perceived higher
risk of illegal occupants in these types of rentals. However,
holiday letting specifically, has the benefit of the Prevention
of Illegal Evictions from and Unlawful Occupation of Land
Act (PIE) not applying to these type of leases.
This has been confirmed in Barnett and Other v Minister
of Land Affairs and Others 2007 (6) SA 313 (SCA). As such,
eviction of illegal occupants from short term rentals for the
purpose of holiday or even business travel, has the benefit
of an eviction process similar to evictions from commercial
properties, meaning quicker and more costs effective
evictions. Another concern to property investors in extreme
short-term rentals is that in many cases the more appealing
properties for this type of renting would be in sectional
title units. Lately, more bodies corporate are considering an
amendment of their conduct rules to disallow rentals of less
than, for instance, six months.
The problem the investor is faced with here is twofold: on
the one hand he might have less properties to consider for
purchase. Even worse, he might invest in a sectional title
unit for the purpose of short-term rental, where the conduct
rules are then amended disallowing his planned business
model for the property.
Knowing your rights and responsibilities
In these cases, it’s important to keep in mind that there is
no legislation that disallows short-term rentals in sectional
title units. It is possible, however, for the body corporate to
include a provision preventing these practices. An owner of
a sectional title unit can oppose suggested amendments to
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the conduct rules of this nature, but the final decision would
be with the majority of the owners of the complex.
It is important to bring to the attention of the bodies
corporate that even though many of the owners in the
complex will occupy their units, very often the majority of
the units in a complex are owned by investors, considering
that buy-to-let investors might be some of the better levy-
paying owners.
It is definitely to the benefit to the body corporate to
allow owners in a complex to profit from their investments,
as this translates to steady levy income. The Sectional Title
Schemes Management Act does require an owner to keep
the body corporate updated with the list of occupants of
every unit, which is often raised as a reason not to follow this
type of investments strategy in sectional title units. With
a system like Airbnb, however, the owner does have full
details of all the occupants of the unit. It would be simple,
then, to send this information on to the managing agent in
complete compliance with the Act.
In terms of the legislation, an owner is also required
to ensure that the occupant of the unit has a copy of the
conduct rules and he is responsible for compliance with
these. In this case, the suggestion would be to email a copy
of the conduct rules together with the application form to
the potential occupant.
It will always be the best practice to have a signed
agreement for a short-term rental, especially because these
units are usually fully furnished. Keeping an inventory as
part of the lease agreement enables owners to protect their
moveable assets in the unit, which is crucial to the business
model. Short-term leases, for instance the TPN LeasePack,
allows for simple yet very secure short-term rentals.