Rental Housing Amendment Bill [B21-2011]: briefing on the redrafted version

Meeting report

Amendments to the Rental Housing Amendment Bill [B21-2011]
The Chairperson advised that the Committee had requested that certain clauses in the Bill were re-drafted and had obtained the mandate to proceed with the changes.  The Department of Human Settlements (DHS), State Law Adviser (SLA) and Parliamentary Law Adviser (PLA) had worked together to draft the amendments.  The deadline for processing the Bill was the end of the current financial year.

Advocate Charmaine van der Merwe, Parliamentary Legal Adviser took the Committee through the proposed amendments (see attached documents).  Four policy issues had been identified for discussion with the Committee.  Most of the changes were drafting technicalities.

Definition of ‘membership’ of the Rental Tribunal
The word ‘membership’ was difficult to define but was generally understood.  The DHS agreed that a definition of ‘membership’ in the Bill was not required.

Clause 2 - Responsibilities of the Minister
Clause 2 (5) made provision for the Minister to monitor and assess the impact of the Act on poor and vulnerable tenants and to take action deemed necessary to alleviate hardship.  The DHS considered the clause to deal with policy requirements, which were covered by the Rental Housing Programme.  The insertion of the provisions might have financial implications on the DHS as it obligated the Minister to take action to alleviate hardship suffered by tenants.  The PLA was of the opinion that policy development could be stipulated in legislation.

Clause 2 (6) made provision for the Minister to define criteria applicable to tenants and to amend or augment the policy framework on rental housing.  The DHS was concerned that the existing Rental Housing Programme would have to be amended and that government might be perceived to interfere with the private relationship between landlords and tenants.

Mr S Mokgalapa (DA) observed that the Act was intended to promote a stable housing market.  He asked what the impact of the proposed legislation was on the housing policy.  He asked if the monitoring requirement stretched the mandate and capacity of the Minister and overburdened the DHS.  The intention of the provisions was good but it might not be practical.  It was necessary for the policy on housing to be clear and to find innovative solutions to the challenges.

The Chairperson said that a broader, more comprehensive policy for State rental housing covered private rental housing and service providers.  The entity responsible for monitoring had to be clarified in the applicable legislation.  The Committee had overall responsibility for conducting oversight.

Ms M Borman (ANC) said that the legislation needed to take cognisance of the policy.  The Bill was intended to address the problems, misunderstandings, lack of clarity and unfair practices related to rental agreements.

The Chairperson said that the executive authority was mandated and responsible for monitoring.

Mr Mokgalapa said that there had been similar concerns when the Committee processed the legislation on sectional title home ownership.  Tenants and purchasers were not fully informed of their financial obligations.  Monitoring was not being done.  He wondered how the Committee would ensure that the necessary resources and capacity were in place to ensure that monitoring was done.

The Chairperson pointed out that sectional title home ownership was not the responsibility of the DHS, unlike State rental housing.  The Committee had to ensure that the legislation was fair to all the role players.

Ms N Mnisi (ANC) asked how provision could be made for monitoring if there was no applicable policy.

Mr R Bhoola (MF) said that the principal Act was the protective shield for tenants.  Amendments had to be synchronised and care had to be taken that there was no negative impact on the existing legislation that prevented the responsible authority from carrying out its responsibilities.

Ms Borman asked for input from the DHS and if it was possible to include policy in the legislation.

Mr Kwezi Ngwenya, Legal Adviser, DHS said that the primary concern of the Department was the advisability of making legal provision for what the Minister was required to provide.  The Minister was responsible for the development and implementation of policy.  It was necessary to issue regulations to give effect to the provisions contained in the Act.  The provincial government authorities had to play a role in implementation as well.  Section 2 (5) specified what was required of the Minister.

The Chairperson said that proposed amendment provided the Minister with direction.  The DHS had previously put the blame on the Act when problems were experienced.  It would appear that the Department was now dissatisfied when the Act was being amended.  Provision was being made for the Rental Housing Tribunal to address complaints and to refer issues to the Minister.  She felt that the DHS was not making concrete proposals.

Mr Bhoola said that the DHS had to define the legal framework that would implement the policy.  The position taken by the DHS was not clear.

Mr Ngwenya explained that the provision required the DHS to provide funding and to assign resources to alleviate hardship suffered by tenants.  The danger was that the Minister was compelled to provide resources regardless of whether or not sufficient resources were available.

The Chairperson pointed out that the provisions in sub-section (5) specified that the Minister “must” monitor and take action.  Sub-section (6) stated that the Minister “may” define criteria etc.  The Minister had recourse and was adequately protected.  The section was not applicable to private rentals.

Clause 7 – Lease agreements in writing
Adv Van der Merwe explained that the current provision in Section 5 of the Act required a written lease agreement only when the tenant insisted.  The concern was that the landlord could alter the terms of the lease.  The Committee felt that all lease agreements should be in writing but that the mandatory clauses should be kept to a minimum.  Suggested provisions were included in the briefing document (slide 6).

The DHS was concerned that illiterate tenants could be taken advantage of.  The signatory to a written agreement might be bound to unfair terms, even if he/she had misunderstood the agreement.  Verbal agreements were difficult to prove and not welcomed by the Court unless there was fraud.

South African common law did not require lease agreements to be in writing.  The amendment would therefore be an amendment of the common law.  An alternative suggestion from the DHS was to make provision for written lease agreements in the regulations.  A pro-forma, simplified lease agreement could be made available at all offices of the DHS.  Clause 5 (6A) was proposed if the Committee agreed to the suggestion.  The PLA suggested that the tenant was given the right to assist on a written lease agreement and that the failure of a landlord to comply was made an offence.  A draft one-page lease agreement that included all the mandatory clauses had been prepared.

Ms Mnisi said that South Africa was a developmental state.  Members of Parliament represented different communities and not all were well-educated and living in well-developed areas.  Disadvantaged communities generally aspired to living in Human Settlement developments but many people were not literate.  The Committee needed to ensure that the interests of illiterate persons were protected.  Verbal agreements allowed people to be manipulated and treated unfairly.  Lease agreements had to be simple, in writing and available in all official languages.  Persons unable to read generally had access to someone who could read.

Mr Bhoola agreed that the major focus of the legislation was to address the vulnerability of tenants.  A written lease agreement had to be binding on both parties.  He asked what the purpose was of regulations and if the regulations could differ from what was provided for in the Act.

Mr Mokgalapa agreed that a written lease agreement had to be in place.  The agreement should be simple and in the mother tongue of the tenant.

Ms D Dlakude (ANC) agreed that the lease agreement should be available in all official languages.  The issue of illegal tenants had to be addressed as well.

Ms Borman saw no difference between a pro-forma lease agreement and a form prescribed in regulations.  She agreed that the agreement must be available in all languages.

Ms M Njobe (COPE) expected that the size of the illiterate population had declined and that the younger generation was generally able to read.  The problem might not be literacy but rather the custom of verbal agreements.  She was concerned over the implementation of the provision and how it could be ensured that written agreements were in place.

The Chairperson agreed that it must not be assumed that rental tenants were stupid and illiterate.  She wanted to see more evidence of support from the DHS for the provision requiring written agreements.

Ms Mnisi added that the Department needed to understand that the prime focus of the Committee was the protection of the vulnerable sector of society.  People should be allowed to rent premises anywhere they wished to live.

Ms Bongi Lufundo, Principal State Law Adviser said that the Department was not opposed to a written lease agreement.  Guidelines needed to be provided.  There was no problem with making a pro-forma agreement available in all official languages at DHS offices and on the internet.

Mr Ngwenya confirmed that the DHS, SLA and PLA had met to discuss the issues previously raised by the Committee.  The concerns raised by the DHS were intended to obtain clarity and to ensure that the legislation was properly formulated.  It did not mean that the DHS opposed the Committee’s suggestions as the proposals had been agreed to

Mr Mokgalapa asked if the common law practice created a loophole that could be exploited to avoid having a written agreement in place.

Adv Van der Merwe explained that the provision in the Act would override the common law practice.  Section 5 of the Act specified that a lease that was not in writing would not be invalid and the tenant was not prevented from approaching the Tribunal.

The Chairperson said that any loophole should be closed.

Ms Borman and Mr Mokgalapa agreed.  If the provision remained in the Act, it would create a problem for the Tribunal.  It would be necessary to have a communication drive to inform people.

The Chairperson suggested that the provision was deleted.

Ms Njobe asked for clarity on Section 5.1 in the Act.

The Chairperson explained that the section referred to Land Act issues, which were not relevant to the Bill.

Clause 10: Membership of Tribunal
Adv Van der Merwe explained that Clause 10 amended Section 19 of the Act.  Provision was made for two alternate sittings of the Tribunal.  The number of Tribunal members was increased to six.

Mr Mokgalapa approved of the concept of matching skills and alternating the members of the Tribunal.

Ms Borman thought two sittings of the Tribunal was sufficient.

Clause 18: Insertion of Section 17A Appeal
Adv Van der Merwe explained that there was a difference between an appeal and a review.  Section 17A made provision for a process of internal appeal.  The DHS had queried the rationale for an internal appeal process as the Tribunal’s procedures already provided for internal redress, most cases were settled at the initial mediation stage and only 1% of cases were taken on review.
It could not be assumed that an internal appeal process would not be needed.  Another matter for consideration was that a case was referred to appeal before the entire process was exhausted.

The Chairperson felt that an appeal to the Court should be a last resort.

Ms Borman saw no difficulty with having such an option available.

Mr Bhoola asked if the legislation gave the Tribunal the power to issue rulings similar to the rulings issued by a Magistrate’s Court.  Evidence provided at a review could not be considered at an appeal.  He asked what the purpose was of a review that was not binding on appeal.

Mr Mokgalapa asked how it would be decided which process would be followed.  The Act dealt with public as well as private rentals.

The Chairperson asked for suggestions concerning the measures that had to be in place to protect tenants.

Mr Ngwenya said that the matter required further thought.  A Tribunal took administrative decisions, which could only be reviewed.  Confusion would arise if provision was made for an appeal process when the decisions of the Tribunal could only be reviewed.  If the decision of the Tribunal was not accepted, the party had recourse to the Court.

The Chairperson disagreed.  The Tribunal had to be able to resolve a matter.

Ms Lufundo pointed out that the Promotion of the Administration of Justice Act (PAJA) required that all internal mechanisms were exhausted before a matter was taken to Court.

Mr Mokgalapa asked what internal mechanisms could be used to resolve the matter.

Adv Van der Merwe disagreed that there could be no appeal system for an administrative decision.  There were many local (e.g. SARS) and international examples.  Provision was made to prevent the abuse of the appeal process by the provision requiring the Minister to prescribe the circumstances under which an application for appeal might be submitted in the regulations.  A review process was not sufficient to protect the vulnerable and dealt with the process that was followed rather than the facts of the case.  Currently, the review request was submitted to the MEC and there was a concern that the decision could be delayed.  A deadline for the decision had to be specified in the regulations.  If appeals were submitted to the Minister, there could be concerns with the additional workload and available resources.

The Chairperson suggested that use was made of the ombud resource as the ombudsman would no longer be involved in mediations.

Adv Van der Merwe replied that the Act provided for the appeal to be submitted to the provincial MEC, who might appoint an external attorney or advocate to consider the appeal.  Five alternatives for an appropriate body to deal with appeals were provided.  Option 1 suggested that the appeal was referred to the Minister; Option 2 referred the appeal to the MEC; Option 3 suggested that the appeal was dealt with in the Tribunal; Option 4 suggested that an appeal body was rotated amongst the provinces and Option 5 was the ideal solution of a National Appeal Board, which was not currently a viable proposition because of financial and resource constraints.

The Chairperson suggested that the matter was reconsidered.

Section 5 (6) (fA): enabling paragraph for a one-page lease contract
Adv Van der Merwe suggested two alternative paragraphs that could be included in the simplified lease contract.  The contract need not repeat the rights and obligations set out in the regulations and in Sections 4A and 4B of the Act.

The Chairperson observed that both alternatives essentially said the same thing.  The second option appeared to be simpler.

Ms Lufundo suggested the second option.  The first option implied that the terms of the contract were dictated.  Sections 4A and 4B could be attached as annexures to the contract.

Ms Borman and Mr Mokgalapa preferred the second option.

The Chairperson thanked the staff from the DHS, PLA and SLA for their effort.

Adoption of Committee Report on State-owned Entities
The adoption of the Committee report on State-owned entities was postponed.  The Chairperson requested Members of the Committee to prepare input on the report for discussion at a later date.

The meeting was adjourned.