Rental Housing Amendment Bill: deliberations

Meeting report

Opening remarks:
The Chairperson noted that the Committee had requested the Parliamentary Legal Office to draft a memorandum to the Speaker which would be discussed at this meeting. The need for a memorandum arose because during deliberations on the Amendment Bill, the Committee had found that further amendments needed to be made to the Rental Housing Act. These changes were important. The National Assembly Rule 249(3)(b) stated that if it was a bill amending provisions of legislation, the Committee needed the permission of the National Assembly to inquire into amending other provisions of that legislation. This was a technical Bill which dealt with the establishment of a governance structure. The principal Act was passed in 1999 and in 2007 there was an amendment to the Act. This Committee had looked comprehensively at the entire principal Act as well as at the 2007 and 2011 amendments and had discovered that there was a need to amend further sections in the principal Act. The Memorandum explained this.
 
The Chairperson noted an article in the Sowetan (18 January 2011) on this Bill. One of the public submissions had raised a concern about student accommodation. The article in the Sowetan spoke of the ills of rental housing that affected students. Parents were responsible to pay rent in these cases but the article showed that there was a problem with the imbalance between the payment of rent and living conditions. Further, the non-payment of rent was criminalised but the non-reimbursement of security deposits was not.

Memorandum on amending other provisions of the Rental Housing Act No.50 of 1999
Adv Charmaine van der Merwe, Parliamentary Legal Advisor, Parliament, said that the Memorandum was a draft. This was part of the correct process to follow when a Committee wanted to further amend the principal Act. Members were free to add any points they felt necessary.

Ms van der Merwe noted that the first part of the Memorandum dealt with the particulars of the proposed legislation. The Department of Human Settlements had introduced a Rental Housing Amendment Bill. This Bill was tagged as a section 76 Bill affecting provinces as it dealt with housing. The previous amendment to this important legislation was done in 2007. In the Bill, the department sought only to address a few main issues, mainly correcting certain wording, the use of which had changed (Housing vs Human Settlements), extending the application of the Act to all provinces, enlarging Rental Tribunals and allowing Rental Tribunals the right to rescind their orders.

The Portfolio Committee had been informed during public hearings and in some instances during oversight visits, had witnessed the injustices that were perpetrated in the area of renting. The Act could play a much larger role in addressing the challenges that the country faced in respect of housing, specifically related to the rental sector. However, this would require that the Act be worded in a fashion that was more accessible to the second economy, to poor and vulnerable tenants. Ms van der Merwe said that the wording “poor and vulnerable tenants” was derived from the Department’s policy. It was surprising to note that the Department had no formal rental housing policy that informed the Rental Housing Act.

Ms van der Merwe went on to explain the second part of the Memorandum which looked at the objects of the 2011 Amendment Bill. The Portfolio Committee proposed that in addition to these amendments made by the Department, some further aspects of the Act should also be addressed at this time while the Bill, and by implication the Act, was before the Committee for consideration. The following amendments were proposed:

2.1. Defining ‘arbitrary eviction;
2.2. Augmenting the duties of the different spheres of government, in relation to inter alia monitoring and financing of Tribunals and Rental Housing Information Offices;
2.3. A clear set out of the rights and obligations of tenants and landlords;
2.4. Requiring leases to be in writing, setting out the minimum content;
2.5. Providing that leases were enforceable in a Rental Tribunal;
2.6. Addressing the nature of orders Rental Tribunals may make, and clearly extending and defining such orders so that the Rental Tribunals’ rulings would be fair and equitable and would give effects to the Act.
2.7. Extending the membership of Tribunals in respect of alternate members.
2.8. Allowing Tribunals to have multiple simultaneous sitting to promote effectiveness and providing for the accompanying governance principles;
2.9. Allowing for an internal appeal process within Rental Tribunals to avoid lengthy and costly court review procedures;
2.10. Requiring all Local Municipalities to provide a Rental Housing Information Office, even if this function was shared with an existing office;
2.11. Clearly defining regulations and identifying which regulations were peremptory;
2.12. Providing for norms and standards in identified geographic areas aligned with the Department’s strategy related to rental and the value of the dwelling; and
2.13. To augment offences and penalties so that certain obligations not adhered and interference with rights by a landlord or tenant would constitute an offence, with specific reference to areas identified as problematic for example non-refunding of deposits.

Ms van der Merwe explained the third part of the Memorandum which dealt with the two financial implications of the further amendments to the Act. Firstly, requiring all local Municipalities to have Rental Housing Information Offices would constitute an additional expense. The Portfolio Committee proposed that Municipalities not yet accredited for Level Three, must financially be assisted by the province in this regard. However, the financial burden could be minor or even non-existent as the Portfolio Committee envisaged that such offices could form part of an existing housing office with an official trained by the National Department to assist the public with rental information. However, even if there was cost involved, this cost was justified as it was imperative that the Tribunals be supported by offices in all municipalities in a province, so as to ensure that the Tribunal achieved full effectiveness.

Secondly, the appeal process might increase the workload of the Tribunal. The Department had already proposed that the Tribunals capacity be enlarged so that the Tribunal could have two sittings at the same time. Provision for the corporate governance aspects of such a double sitting was made in the Bill. It was thus possible to allow for an appeal procedure without appointing further members of the Tribunal. Further, the Portfolio Committee proposed that the Minister make regulations setting out an appeal process, which may include a paper-based process to reduce costs. The regulations should further describe what circumstances would allow one to qualify for an appeal so as to avoid frivolous applications.

Ms van der Merwe added that the plan was for an existing housing staff member to go for training to keep the first financial implication to a minimum. The appeal process was possible if two sittings could be held at once and by making the process a paper-based one similar to a small claims court procedure where no lawyers were allowed.

Discussion
Mr A Steyn (DA) said that the wording in paragraph 2 of the Memorandum “In the Bill” had to be more specific and be changed to “In the proposed 2011 Amendment Bill”. Also, under 2.2. on the first page of the Memorandum, it should be specified where the Rental Housing Offices were to be located.

Mr A Steyn felt that 2.3 of the Memorandum “A clear set out of the rights…” was an incomplete sentence.

Ms van der Merwe replied that she would have another look at the wording and include the relevant words to make the sentences more complete.

The Chairperson said that written agreements were very important, as stipulated in 2.4. It could even be a one pager stipulating what was expected from tenant and landlord.

Ms M Borman (ANC) said that most people were aware that they needed to get their deposits back. However, they were not aware that they should also receive the interest accrued on their deposits.

Mr Steyn wanted the Memorandum to include detail about the exact number of members for the Tribunals, which the members agreed would be six. He recommended caution about the Bill ctually specifying the exact number of square meters costing a certain amount of rental.

The Chairperson agreed that the Legal Office had to try to work into the Bill this concern abut exploitation in a manner that could be used to protect people who were being exploited – where they were paying the same rent for a shack as for an apartment, irrespective of the size of the dwelling unit. The norms and standards were not equal. The Committee was proposing amendments due to what they had observed during their oversight visits. There should be a balance between the public and private sectors as well.

Mr Steyn asked if the Committee could stipulate a timeframe for regulations to be drafted as these were required before an Act could be implemented.

Ms van der Merwe replied that the Committee could do this, as it had already been indicated in the amendments. The timeframe for implementation was 12 months.

Working Draft of all current Amendments to Rental Housing Act
Ms van der Merwe explained that this working document was inclusive of proposed amendments to the 2011 Amendment Bill (brown colour coding), amendments discussed on 17 and 18 January 2012 (red colour coding) and amendments requested at the 18 January meeting (blue colour coding).

Section 1 Definitions
On page 3, to define “arbitrary eviction” as referring to a tenant being forced to evacuate a dwelling, without an order of court made after considering all the relevant circumstances.

On page 4, to omit the word [housing] and insert the words Human Settlements.

Section 2 Responsibility of Government to promote rental housing
On page 5, to include the following subsection: 2 (2)(e) provide legal mechanisms to protect the rights of tenants and landlords against illegal actions by the other party by affording speedy means of redress.

On pages 5 and 6 to insert new subsections 2(5) and 2(6):
2(5) The Minister must – (a) monitor and assess the impact of the application of this Act on poor and vulnerable tenants; and (b) take such action as he or she deems necessary to alleviate hardships that may be suffered by such tenants.
2(6) For purposes of section (5), the Minister may define criteria based on age, income, or other form or degree of vulnerability that apply to such tenants or group of tenants and amend or augment the policy framework on rental housing, referred to in section (3) in such a manner as he or she sees fit.

Section 3 Measures to increase provision of rental housing property
On page 6, to include new subsections (5) and (6):
(5) National Government must develop and fund programmes to train members of the Tribunals and officials appointed in terms of section 14(2).
(6) Provincial Government must financially assist local municipalities not yet on level three accreditation, in establishing Rental Housing Offices as contemplated in section 14.

Chapter 3 [RELATIONS BETWEEN] RIGHTS AND OBLIGATIONS OF TENANTS AND LANDLORDS
Section 4A Rights and obligations of Tenants
On page 8, to include the following: (1)Tenants shall have the right to receive a written receipt from the landlord for all payments received by the landlord, which receipt must (a) be dated; (b) clearly indicate the address, including the street number and further description, if necessary, of a dwelling in respect of payment made; (c) whether payment had been made for rental, arrears, deposit or otherwise; and (d) specify the period for which payment is made.

On page 8, to insert after section 4A(d) the wording Provided that a Tribunal may, in exceptional cases, and on application of the lease to provide him or her with written proof in respect of interest accrued on a deposit paid.

On page 8, to insert the following: (2) Tenants may request the landlord during the period of the lease to provide him or her with written proof in respect of interest accrued on a deposit paid. (3) On the expiration of the lease, tenants have the right to receive payment of the deposit and interest without any deduction or set-off, within seven days of expiration of the lease: Provided that where the tenant (a) is liable to the landlord for any amounts under the said lease, including the reasonable cost of repairing damage to the dwelling during the lease period and the cost of replacing lost keys, the landlord may deduct such amounts and refund the balance of the deposit and interest to the tenant not later 21 days of restoration of the dwelling to the landlord. (4) Tenants have the right to inspect the relevant receipts which indicate the costs which the landlord incurred, as contemplated in section (3) as proof of such costs incurred by the landlord. (5) Tenants have a right to, in the presence of the landlord and before the tenant moves into the dwelling, have the dwelling inspected to – (a) determine the landlord’s responsibility for rectifying any defects or damage; and (b) register any defects or damage, as provided for in section 5(7).

On page 9, to insert the following: (6) At the expiration of the lease the tenant must make him or herself available to conduct a joint inspection of the dwelling at a time convenient to the landlord and tenant to take place within a period of three days prior to such expiration with a view to ascertain if there was any damage caused to the dwelling during the tenant’s occupation thereof. Provided that – (a) failure by the landlord to inspect the dwelling in the presence of the tenant as contemplated in section (6) is deemed to be an acknowledgement by the landlord that the dwelling is in a good and proper state of repair, and the landlord will have no further claim against the tenant; or (b) failure by the tenant to respond to the landlord’s request for an inspection as contemplated in section (6), will result in the landlord conducting an inspection without the tenant present after which the landlord may deduct any damages or loss occurred during the tenancy in term of section (3)(b). (7) A tenant has the right, during the lease period, to privacy, and should the landlord wish to exercise his or her right of inspection it must be done in a reasonable manner after reasonable notice to the tenant.

On page 9 to insert the following: (8) Tenants rights as against the landlord include his or her right not to have – (a) his or her person or home searched; (b) his or her property searched; (c) his or her possessions seized, except in terms of a law of general application and having first obtained a ruling by a Tribunal or an order of court; or (d) the privacy of his or her communications infringed. (9) The rights set out in subsection (8) apply equally to members of the tenant’s household and to visitors of the tenant. (10) Tenants are liable for rental and other costs agreed on in the lease upon the due date, but for costs other than those agreed to in the lease tenants are only liable upon proof of factual expenditure by the landlord.

Section 4B Rights and obligations of Landlords
On page 10, to insert the following: (1) Landlords shall have the right to apply to a Tribunal for an exemption to provide a written receipt as contemplated in section 4A(1). (2) A landlord may require a tenant, before moving into the dwelling, to pay a deposit which – (a) [at the time] may not exceed an amount equivalent to an amount specified in the agreement or otherwise agreed to between parties; (b) must be invested by the landlord in an interest-bearing account with a financial institution: Provided that the rate applicable to such an account may not be less than the rate applicable to a savings account with that financial institution; and (c) must be subject to sections (4) or (7). (3) Upon request from the tenant during the period of the lease, the landlord must provide him or her with written proof in respect of interest accrued on the deposit referred to in section (2): Provided that where the landlord is a registered estate agent as provided for in the Estate Agency Affairs Act, 1976 (Act No. 112 of 1976), the deposit and any interest thereon shall be dealt with in accordance with the provisions of that Act.

On page 10, to insert the following: (4) On the expiration of the lease, the landlord – (a) must, where no amounts are due and owing to the landlord in terms of the lease, the deposit, together with the accrued interest in respect thereof, refund the tenant, without any deduction or set-off, within seven days of expiration of the lease; (b) may apply such deposit and interest towards the payment of all amounts for which the tenant is liable under the said lease, including the reasonable cost of repairing damage to the dwelling during the lease period and the cost of replacing lost keys and the balance of the deposit and interest, if any, must then be refunded to the tenant by the landlord; and (c) must make available to the tenant for inspection the relevant receipts which indicate the costs which the landlord incurred as contemplated in section (4)(b) as proof of such costs incurred by the landlord.

On page 11, to insert the following: (5) The tenant and the landlord must jointly, before the tenant moves into the dwelling, inspect the dwelling to ascertain the existence or not of any defects or damage therein with a view to determining the landlord’s responsibility for rectifying any defects or damage or with a view to registering such defects or damage, as provided for in section 5(7). (6) At the expiration of the lease the landlord and tenant must arrange a joint inspection of the dwelling at mutually convenient time to take place within a period of three days prior to such expiration with a view to ascertain if there was any damage caused to the dwelling during the tenant’s occupation thereof: Provided that (a) failure by the landlord to inspect the dwelling in the presence of the tenant as contemplated in section [(5) or] (6) is deemed to be an acknowledgement by the landlord that the dwelling is in good and proper state of repair, and the landlord will have no further claim against the tenant who must then be refunded, in terms of this subsection, the full deposit plus interest by the landlord; or (b) should the tenant fail to respond to the landlord’s request for an inspection as contemplated in section (6), the landlord must, on expiration of the lease, inspect the dwelling within seven days from such expiration in order to assess any damages or loss which occurred during the tenancy.

On page 11, to insert the following: (7) The landlord, in the circumstances contemplated in section (6)(b), without detracting from any other right or remedy of the landlord – (a) may deduct from the tenant’s deposit and interest the reasonable cost of repairing damage to the dwelling and the cost of replacing lost keys; (b) must refund the balance of the deposit and interest, if any, after deduction of the amounts contemplated in paragraph (a), to the tenant not later than 21 days after expiration of the lease; (c) must make available the relevant receipts which indicate the costs which the landlord incurred, as contemplated in paragraph (a), to the tenant for inspection as proof of such costs incurred by the landlord. (8) Should the tenant vacate the dwelling before expiration of the lease, without notice to the landlord, the lease is deemed to have expired on the date that the landlord established that the tenant had vacated the dwelling but in such event the landlord retains all his or her rights arising from the tenant’s breach of the lease.

On page 12, to insert the following: (9) Landlords may inspect the dwelling during the course of the lease, but in doing so must respect tenants right to privacy during the lease period and may only exercise his or her right of inspection in a reasonable manner after notice to the tenant. (10) Landlords’ rights against tenants include his or her right to – (a) prompt and regular payment of [a] rental or any charges that may be payable in terms of a lease; (b) recover unpaid rental or any other amount that is due and payable where the tenats fails or refuses to make payment on demand after obtaining a ruling by the Tribunal or an order of a court of law; (c) terminate the lease in respect of rental housing property on grounds that do not constitute an unfair practice and are specified in the lease; (d) on termination of a lease to – (i) have the tenant vacate the property immediately upon expiration of the lease and to receive the rental housing property in a good state of repair, and save for fair wear and tear; and (ii) where the tenant fails or refuses to vacate the dwelling, repossesses the rental housing property having first obtained [a ruling by the Tribunal or] an order of court; and (e) claim compensation for damage to the rental housing property or any other improvements on the land on which the dwelling is situated, if any, caused by the tenant, a member of the tenants household or a visitor of the tenant. (10) Landlords must ensure that the provisions of sections 5(6), (7) and (8) regarding the lease are complied with. (11) Landlords must maintain the structure of and provision of utilities to the dwelling.

Section 5 Provisions pertaining to leases
On page 12, to amend (1) A lease between a tenant and a landlord [subject to subsection (2), need not] must be in writing [or] but will not be subject to the provisions of the Formalities in Respect of Leases of Land Act, 1969 (Act No. 18 of 1969). (2) A landlord must [, if requested thereto by a tenant,] reduce the lease to writing and must ensure that it contains the information set out in section (6).  

On page 13, to amend (3) A lease will be deemed to include terms, enforceable in a tribunal or competent court, [to the effect that - ] setting out the rights of tenants and landlords referred to in section 4A and 4B.

On page 15, to amend (6)(b) the description of the dwelling which is the subject of the lease: Provided that a street address will be sufficient:

On page 16, to insert (fA) a statement acknowledging the rights and obligations of the tenant and landlord in terms of sections 4A, 4B and the regulations relating to unfair practice; (g) any other obligations of the tenant and the landlord, [which must not detract from the provisions of subsection (3)] not set out sections 4A, 4B or the regulations relating to unfair practice; (h) identification and the amount of [the rental, and] any other charges payable in addition to the rental in respect of the property. (7) A list of defects registered in terms of [subsection (3) (e)] sections 4A(5) and 4B(5) must be attached as an annexure to the lease as contemplated in subsection (2).

Section 9 [Composition] Membership of Tribunal
On page 17, to amend (1B) The members of the Tribunal must be broadly representative in terms of gender, race and [people with disability] disability.

On page 17, to amend (2)(b) the MEC has consulted with the relevant standing or portfolio committee of the Provincial Legislature which is responsible for [housing] Human Settlements matters in the province. (3) The MEC may appoint up to six persons to serve as alternate members of the Tribunal in the absence of any member referred to in paragraphs (b)(i), (ii) and (iii) of subsection (1) respectively, but such persons must have the relevant expertise contemplated in paragraphs (b)(i), (ii) and (iii) of subsection (1) respectively.

On page 18, to insert (4B) Succession plans must be adopted and must provide for replacement of members in such a manner that, for the sake of continuity, all members are not replaced at once. (4C) Where members already appointed at the time of commencement of the Rental Housing Amendment Act, 2012, have already served two consecutive terms, the succession plan must provide for replacement of such members over an eighteen month period to ensure continuity.

Section 10 Meetings of Tribunal
On page 19, to amend (1A) The Tribunal may, subject to sections 10(2B) and 10(5), arrange two simultaneous meetings in different [geographical] areas for purposes of effective functioning.

Section 13 Complaints
On page 23, to insert in (4)(c) make any other ruling that is just and fair to terminate any unfair practice, including, without detracting from the generality of the aforegoing, a ruling to discontinue any or all of – (i) overcrowding; (ii) unacceptable living conditions, (iii) exploitative rentals; or (iv) lack of maintenance.

On page 23, to omit in subsection (5)(a) prevailing economic conditions [of supply and demand]

On page 24, to insert subsections (11)(d) and (11)(e). (11)(d) subject to section (5), make a ruling to compel payment of rent as described and contracted to in a lease and arrear rentals; and (e) in respect of any matter over which it has jurisdiction, make any order necessary to give effect to this Act.

On page 25, to insert after subsection (12B), Provided that any substantive change to a ruling must be made within 14 days of the ruling being made. (12C) An application for rescission or variation must be brought within 14 days of the ruling bring received by the affected person.

Section 14 Information Offices
On page 25, to amend (1) Every local municipality [may] must establish a Rental Housing Information Office to advise tenants and landlords with regard to their rights and obligations in relation to dwellings within its area of jurisdiction: Provided that local municipalities not yet accredited to level three may combine the functions of the Rental Housing Information Office with an existing office.

Section 15 Regulations
On page 26, to amend subsection (1) Subject to section (3) [T]the Minister [must] may after consultation with the relevant parliamentary committees and every MEC, by notice in the Gazette, make regulations relating to – (a) anything which may or must be prescribed under [Chapter 4] this Act; (b) the procedures and manner in which the proceedings of the Tribunal must be conducted, including circumstances and process for submitting an appeal

On page 27, to insert subsection (fA) circumstances that will be regarded as urgent for purposes of section 13(10); (fB) norms and standards per identified geographical areas that are aligned to the policy framework set out in section 2(3), related to rent in relation: (i) square metres of the dwelling, taking into account the measures set out in section 13(5); (ii) amenities offered; (iii) facilities offered; and (iv) any other factor that may be applicable

On page 27, to insert subsection (3) The Minister must issue regulations as contemplated in section 1(b), (f) and (fA) within 12 months of the commencement of the Rental Housing Act, 2012.

Section 16 Offences and Penalties
On page 28, to insert subsections (aA) and (aB). (aA) wilfully or grossly negligently interferes with the rights of the tenant and landlord set out in sections 4A(1), (3), (7), (8) and (9) and sections 4B(9), (10)(b), (10)(c) and (10)(d)(i); (aB) wilfully or grossly negligently fails to fulfil his or her obligations as landlord in terms of sections 4B(2)(b), (2)(c) and (11) respectively.

Section 17 Appeal and Review
On page 29, to insert the following subsection (3) The Minister must prescribe – (a) the circumstances under which an application for an appeal may be submitted; and (b) the procedure to submit an appeal, which may include first obtaining consent to appeal from the members of the Tribunal who made the ruling.

Discussion
Mr A Steyn (DA) said that if the landlord failed to invest the tenant’s deposit in an interest bearing account, it should not be considered as an offence. This seemed too harsh as many landlords renting out one or two dwellings would not necessarily open up an interest bearing account just for this purpose.

Ms van der Merwe replied that she would look more carefully at exactly which penalties would apply in the case of interest not being paid. However, opening an interest bearing account would not be the ultimate rule, as long as the landlord paid the deposit back with interest according to inflation at the time. 

Mr Steyn wanted clarity around the meaning of ‘maintenance’ as this also constituted an offence in the Act.

The Chairperson agreed that this was an important point to consider as many people were paying rent for dwellings which were uninhabitable. These people were being exploited as they sometimes had no other choice on where to live. The exact penalties around such offences had to be stipulated.

Ms M Borman (ANC) suggested that the word be included under the definitions.

Ms N Mnisi (ANC) agreed that ‘maintenance’ was important as many buildings especially in the Johannesburg area had deteriorated and in order to make them habitable, maintenance was needed.

Mr A Figlan (DA) wanted more clarity on the right to privacy in cases where tenants were doing unlawful things such as selling drugs.

The Chairperson replied that in such cases the landlord had the right to contact the police and the police would then take it from that point.

Mr Steyn wanted to know whether this Bill had now become a Committee Bill due to the large number of proposed amendments.

Mr Gary Rhoda, Parliamentary Legal Advisor, replied that it had become a Committee Bill, but this was a dual process with the Department as well as the Committee.

The Chairperson said the Committee would be meeting with the Department to discuss all these changes. 

The meeting was adjourned.