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The Real Estate sector is a massive contributor to the South African economy and the Covid-19 pandemic united South Africa’s real estate sector in a big way. All the hard work and tireless efforts put in by many in the property sector to bring relief to thousands of property practitioners who could not earn an income for the past two months as a result of the lockdown clearly did not go in vain.
Property Practitioners were relieved to finally return to work in June under Level 3 in terms of the new regulations published on 28 May 2020 on condition that they adhered to strict safety protocols, keeping themselves and their clients safe from infection.
Given the challenging economic climate, re-opening of the Real Estate sector will inject the much needed liquidity into the property market. Home owners can now trade their biggest asset and unlock much needed capital, alternatively they can look at down-scaling to more affordable properties.
SAFETY FIRST:
The new regulations stipulate strict adherence to the health and safety requirements for all businesses that are reopening. They include the following:
· All industries, businesses and entities must have a designated Covid-19 compliance officer
· Every business must have a plan for the phased return of their employees to the workplace
· Employees 60 years and older and/or with co-morbidities such as diabetes, high blood pressure, asthma, cancer should work from home if they can
· Adhere to social distancing measures and health protocols such as mandatory wearing of face masks, using hand sanitizers, daily screening of employees etc
· Evictions remain prohibited with certain exceptions as granted by the courts
· Short-term leases for leisure purposes remain prohibited
TIPS FOR LESSORS:
Landlords should be thinking about how they can gain as much goodwill as possible during this time. A good relationship between owner and tenant has real value, especially when times are tough. Keeping this in mind, landlords have a few rental relief options which they could offer to their tenants:
Write-Off
o Landlords if in a position do to so, could write off 50% of the rental due. These losses can then be reported in their tax returns
Payment Holiday
o The most common form of rental relief offered is a payment holiday. Landlords are capitalising the payment holiday (which is usually around 3 (three) months’ worth) into the lease. It is highly advisable to include an addendum into the Lease Agreement stipulating the details of such agreement
Drop in interest rate:
o Some Landlords, once again if in a position to do so, are passing on the savings they have seen as a result of the interest rate cuts. Even a small saving makes a tenant exultant and grateful
TIPS FOR LESSEES:
The sudden and vicious downturn in the economy came as a shock to everyone especially the more vulnerable individuals such as tenants. However, there are certainly some steps tenants could take to protect their future.
Communication is key:
o We are all prone to panic. In times like these, it’s important to focus on what you can do. As a tenant, you should not just assume that your Landlord understands your financial difficulty. Speak to your Landlord and explain your situation. Keep all the necessary documentation at hand when going to your landlord to help plead your case. However, keep in mind, your Landlord does not owe you any form of rental relief. Delinquent tenants who refuse to take calls or communicate with their landlords will be viewed very unfavourably in future.
Seek Rental Relief:
o There are many rental relief options you may request from your Landlord. However, do not forget to also consider the impact of such. Simply opting for a payment holiday, for instance, may come with some very unattractive long-term consequences. Interest will still be accruing and you could end up with a nasty surprise. Do the calculations, read, and understand before you sign anything.
with Love,
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