Michelle Dickens, managing director of TPN property credit bureau, advises property managers and landlords to seek legal advice when it comes to interpreting the language of the act.

The Argus quotes her as follows : “The CPA is very positive for consumers but poses concerns for those invested in the property rental market. Many aspects of the act remain unclear and businesses need to empower themselves through knowledge.”

It is clear that a rental agreement is specifically defined as a service in the CPA, and tenants who contract in their personal capacity (or juristic capacity earning below an income threshold still to be determined) will enjoy the protection of the CPA.

Marlon Shevelew, property legal expert and founder of Marlon Shevelew and Associates, believes the act will have a strong impact on rental property, as it will introduce uncontrolled and seemingly unfair rights for tenants.

The Argus quotes her : “In many instances tenants will now be able to get out of lease agreements at the expense of property owners and managing agents. It will also enable them to simultaneously place added obligations and additional burdens such as extra expenses and legal restraints on landlords and managing agents,” says Shevelew.

Shevelew says property managers and landlords need to be aware of the following:

- The act contains various sections which are unclear if they apply to rental property. This makes it virtually impossible for landlords and property managers to discern transgressions of the CPA.
- All documentation, such as lease agreements must be written in plain and understandable language to comply with section 22 of the CPA.
- The act introduces constraints on direct marketing and the definition of discrimination is ambiguous, which will make it more difficult to run rental businesses.

“The CPA will affect the rental industry in a number of ways,” Shevelew says. “Section 14 of the act, among others, clearly gives tenants rights to terminate fixed terms agreements on 20 business days’ notice. Landlords or managing agents can hold tenants liable for the rent until the cancellation date and a reasonable cancellation fee. The concern is the determination of what a reasonable cancellation fee is.

“Section 14 also affords tenants 20 business days to remedy any breaches of agreement. This will certainly delay the ability of landlords or managing agents to proceed with cancelling any contracts or legal actions before this 20 business day remedy.

“Compounding this is the inherent right of tenants to raise defences of discrimination, unclearly worded lease agreements and others to guard themselves against the relief that landlords might need to terminate leases or evict tenants.
“The downside is that property owners and buy-to-let investors will be uncertain of their rental income, their bond repayment shortfalls and their ability to use lease agreements as collateral security for bank loans, to mention a few.”

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