SPEECH BY LN SISULU MINISTER OF HOUSING AT THE OCCASION OF THE DEBATE ON THE RENTAL HOUSING AMENDMENT BILL
20 NOVEMBER 2007
National Council of Provinces, Cape Town
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Chairperson;
Honourable Members of the 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 an honorous and or 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