L Sisulu: Debate on Rental Housing Amendment Bill

20 November 2007

Chairperson
Honourable Members of the National Council of Provinces (NCOP)

According to the most recent statistics at our disposal, only 10% of our
population can afford to buy and own a house at the current prices.
Chairperson, this should tell all of us here the dire need that exists out
there for the rest of the population who cannot be catered for by government
and who do not fall within the 10% bracket as indicated. For this group, we are
dependent on rental as the only means for the provision of accommodation and
shelter. We are therefore heavily reliant on and place particular stress on the
efficient functioning of the rental housing market.

Over the past eight years, we have operated under a very specific rental
framework and have found that we needed to urgently attend to its shortcomings
so as to ensure greater efficiency and greater fairness in its application.

What we bring to the House today, is an amendment to existing rental
legislation, brought about after extensive consultations which began exactly a
year ago. Subsequently, the amended bill was published in the government
gazette and what we bring for your approval is a culmination of these
processes.

Basically, the bill endeavours to address some critical implementation
problems and to remove vestiges of discrimination that stubbornly remained in
our system and to remove a great deal of unfair burden on the landlord.

We start of by defining 'unfair practice' to ensure that all manner of
unseemly practices which had a discriminatory effect, were included in the
definition and therefore prohibited. The definition now means any act or
omission by a landlord or tenant in contravention of the Act and any practice
prescribed as a practice unreasonably prejudicing the rights or interests of a
tenant or landlord. The Bill makes provision that 'unfair practices' will be
dealt with fully in the Regulations which are being drafted in full
consultation with the provinces and rental housing tribunals. A workshop,
Chairperson, will be held in Johannesburg on 22 and 23 November 2007 with
Government stakeholders to obtain inputs for the Regulations.

The reason for this amendment was because there was uncertainty as to what
constituted unfair practices. With the amendment and the Regulations all unfair
practices will be covered and there will be no uncertainty. Consequently, a
great deal of the unhappiness experienced with the law, minimised.

We have deleted references to 'bona fide' in the law. This is done to ensure
that a landlord may not discriminate against any visitor (of a tenant), thus
removing the current limitation. Currently a landlord has the prerogative of
prohibiting any visitor they do not consider to be bona fide.

Rental Tribunals are given the right to issue rulings pertaining to the
seizure of possessions, subject to any regulations the Minister may have made
in this regard. The Act is being amended to expressly provide for the seizure
of possessions of defaulting tenants, but only after a ruling to that effect by
a Rental Housing Tribunal or an order of court.

Further, amendments are made on information on the rental receipts. The
relevant section specifies the information which must be contained on a receipt
issued by the landlord for payments made by a tenant. The argument has been
raised that, where for instance tenants are able to make payments at
supermarkets etc, all the required information cannot be provided. To cater for
this situation, subsection (3)(b) is amended to allow a Tribunal, in
exceptional circumstances, to exempt a landlord from providing certain
information.

This amendment was necessary because in some instances it is difficult for
the landlord to provide the information, particularly if there is an agent
acting on behalf of the landlord. However, the Tribunal will certainly require
proof of all monies paid by the tenant which will protect the tenants from
unscrupulous landlords.

Section 5 of the Act is therefore amended to clarify aspects pertaining to
the issuing of receipts by landlords, namely, that a Tribunal may, in
exceptional cases, and on application of the landlord, exempt the landlord from
providing the information contemplated in this Bill.

There is an additional subsection to the Act providing that any costs in
relation to contract fees in lease agreements shall only be payable by the
tenant upon proof of actual expenditure by the landlord. This will prevent
landlords from charging exorbitant costs for a standard contract of lease.

Amendments make provision for the manner in which the landlord must invest
the deposit paid by the tenant. The problem encountered in this regard has been
that the law provides that the landlord must invest the deposit in an
interest-bearing account with a financial institution, and must pay the tenant
the interest accruing, provided that the rate of interest may not be less than
the rate applicable to a savings account with a financial institution. In
practice, however, different financial institutions have different interest
rates, and the current wording of this provision does not allow for this. A
technical amendment is therefore made to refer to such interest rate applicable
to that financial institution.

A new paragraph has been included to deal with any costs associated with
compliance with the provisions of the law. The reasoning behind this insertion
is based on the fact that some landlords are exploiting tenants with regard to
the payment of so-called contract fees.

The problem with the so-called contract fees lies in the fact that landlords
buy over-the-counter standardised lease agreements from stationary shops, and
then charge tenants exorbitant contract fees based on the misrepresentation
that the agreement had been prepared by an attorney. In this regard the
paragraph proposes that contract fees shall only be payable by a tenant upon
proof of actual expenditure by the landlord.

Importantly, the jurisdiction of the Rental Tribunals is clarified. The Act
is amended by the inclusion of a sub-section which gives the Tribunal the power
to issue spoliation and attachment orders and to grant interdicts. This was not
spelt out in the original Act. The spoliation orders and interdicts could be
for the benefit of both landlords and tenants whereas the attachment orders
would generally be for the benefit of the landlord against the tenant.

The rulings of Tribunals must now be enforced in terms of the Magistrates'
Courts Act, 32 of 1944 and a Tribunal must refer any matter that relates to
eviction to a competent court. The reason for the above inclusion is to ensure
that no Tribunal has a right to evict. In terms of section 26(3) of the
Constitution only a court may order an eviction.

Unfortunately, the common occurrence where landlords make unlawful lock-outs
and the shutting off of utilities is now regarded as an offence. At all times,
landlords are required to ensure they comply with the correct legal
procedures.

The bill is amended by the substitution of some subsections so as to vest
the power to make regulations in the Minister as compared to the current
provision which enables MEC's to make regulations. This is done to ensure
uniformity throughout the country with regard to the processes and procedures
to be followed by Tribunals, as well as the rulings it may make with regard to
unfair practices. In this regard this has resulted in a great deal of
variety.

Finally, it is our view that these changes will bring much needed changes in
the rental housing market which would enable it to be one of the dominant
instruments of our policies. As the consultations over the Bill revealed, our
interactions with the housing sector shows that the sector approves and is
ready to accept these changes.

I therefore, Chairperson, introduce the Rental Housing Amendment Bill,
2007.

I thank you

Issued by: Department of Housing
20 November 2007
Source: Department of Housing (http://www.housing.gov.za)