MANAGING
It’s all about the money
Make sure the tenant pays the deposit up front
T
here is currently a very high demand for
rental properties, particularly at the lower
end of the residential property market.
Frequently a prospective tenant will have credit
checks done by the agent on completion of their
application form and perhaps the necessar y
references done, but because of the particular
circumstances of the tenant they are sometimes given
occupation of the property prior to the deposit or first
month’s rent being paid.
They could be waiting for a refund on their deposit
from a previous rental or have had to pay over part
of their deposit due to repairs becoming necessary
to their previous leased property, but whatever the
reason, this can often be the beginning of a disastrous
relationship. If the tenant has not paid the required
sums and has possession of the property, there is
frequently an ongoing battle to get the full deposit
from the tenant or it can result in small installments
being paid over time.
This is not advisable, as this is the landlord’s
guarantee that, should the tenant cause damage to
his property, the landlord has some financial recourse
to put matters right. If he does not have this and the
tenant has left, it will result in hugely expensive legal
costs which at the end of the day cost more than the
repairs.
The landlord eventually ends up writing the amount
off and this could wipe out his profit for the year.
Another point to remember that once the tenant is
behind in his payments, the chance of him completely
catching up on the arrears is very slim.
14
Residential Handbook 2014
www.reimag.co.za