Rental Housing Amendment Bill (B21-2011): Consideration of Public Comments: Committee Report on Department Budget

Meeting report

The Chairperson invited the Parliamentary Legal Adviser, Adv Charmaine van der Merwe, to brief the Committee on the proposed changes to the Rental Housing Amendment Bill (B21-2011) arising from comments which had been made during the public participation process, and which had been discussed at the previous meeting of the Committee.

Adv Van der Merwe said she had summarised the comments and taken the views of Members into consideration in drafting the changes, which had been forwarded to the State Law Adviser, as well as the Department. She felt that the suggested changes represented the feelings of the Committee, but where this was not the case, she would be guided by the Committee.

Mr Achmed Kariem, Parliamentary Liaison for the Family Policy Institute, had submitted a series of articles about rental problems in Canada, pointing to rent increases which crippled tenants. Adv Van der Merwe said the matter of rental abuse had been covered in the norms and standards section of the Bill, and had been addressed by the Committee, so no changes were needed.

The Banking Association of South Africa (BASA) had raised several issues.

The first referred to sub-sections of Clause 2, which mandated the Minister to “(a) monitor and assess the impact of the application of this Act on poor and vulnerable tenants; and (b) to take such action as he or she deems necessary to alleviate hardships that may be suffered by such tenants.”  The sub-sections also allowed the Minister to “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…in such a manner as he or she sees fit.” BASA had expressed concern that the wording might frighten off private landlords, especially in urban inner cities. Adv Van der Merwe agreed that a clearer distinction needed to be made between “social housing tenants” and “other classes of private sector tenants,” and proposed that the wording of the sub-section (b) should be changed to: “…develop such relief measures and other social programmes as part of the policy framework on rental housing…as he or she deems necessary to alleviate hardships that may be suffered by tenants contemplated in paragraph (a)(i).

The next issue raised by BASA dealt with the rights and obligations of landlords and tenants, specifically the stipulation that a contract had to be in writing, which meant that both landlords and tenants might not be in compliance with the Act when it was implemented. As a result, the wording of Section 5 of the principal Act had been changed to provide that all leases entered into after the implementation of the Act, had to be in writing. When non-written contracts were renewed, they would have to be in writing. BASA also wanted a transitional provision to ensure that the new requirements were not retrospective, and applied only to agreements concluded after the amendment had come into effect. This had been catered for by the addition of a sub-section in Clause 18, reading: ”Any additional or amended obligations imposed upon a landlord or tenant by the Rental Housing Amendment Act, 2012, shall become effective three months from the date of commencement of the Act.” Adv Van der Merwe said this provision would have the additional benefit of allowing the Department time to educate the public about the new legislation.

The Chairperson asked what could be done to prevent landlords in future from not providing written leases.

Adv Van der Merwe said non-compliance would be difficult to handle, and the Department would have to work with the police, although the ideal way to resolve issues would be for tenants to bring the matter before a tribunal.

Ms Bongiwe Lufundo, Principal State Law Adviser, said she felt the provisions of the Bill would allow tribunals to resolve problems with leases. She added that the Act could never be applied retrospectively.

Adv Van der Merwe said while she agreed the Act could not be applied retrospectively, those parties not in compliance would need to comply after it was implemented, which was why a three-month transition period had been suggested, although this could perhaps be extended to six months.

The Chairperson said it was important to have a transition period so that people could correct wrongful situations, as well as become more aware of the provisions of the Act.

Another issue raised by BASA referred to deposits paid by tenants to landlords. It had been suggested that deposits should be placed in an “arms-length” trust account, so that in the event of the insolvency or liquidation of a landlord, the tenant’s funds were protected.

Adv Van der Merwe said that an “arms-length” trust account would amount to an additional burden to the landlord, and still did not guarantee exclusion from his or her estate. The matter would be better dealt with by adding a paragraph stating simply that the deposit did not form part of an insolvent or deceased estate.

The next proposal of BASA was that there should be separate chairpersons for the two committees of the tribunal.  This had been clarified by stipulating that when tribunal meetings were held simultaneously, one would be chaired by the chairperson, and the other by the deputy chairperson.

The Bill had made provision for different norms and standards to be applied to different geographical areas. These related to matters such as lease conditions, safety, health and hygiene, access to basic amenities, size, overcrowding and affordability. BASA’s view was that the norms and standards should be applied uniformly on a national basis.

Adv Van der Merwe said the provision had been introduced to allow for the different circumstances prevailing, for instance, in dense urban areas like Gauteng, compared to the rural Eastern Cape. These factors would have a significant impact on determining rental levels, or the sizes of rooms, for instance. The focus of norms and standards was to deal with specific unfair practices in particular areas.

Several comments had also been received from Eskom. One of these referred to the provision that “landlords must maintain the structure of and provision of utilities to the dwelling.” As this could be misconstrued to require the landlord to install the infrastructure or facilities, even if they were non-existent or beyond the landlord’s control, the wording of the sub-section had been amended to read: “Landlords must provide a tenant with a dwelling that is in a habitable condition, as well as maintain the existing structure of the dwelling and where possible facilitate the provision of utilities to the dwelling.”

Eskom had suggested that the pro forma lease prescribed by the Minister, containing minimum requirements for a lease, should be used only as a guideline. The wording of this subsection had been changed to read that the Minister must develop (not prescribe) a pro forma lease agreement, in all 11 official languages, containing the minimum requirements set out in the Act, and that it could be used as a guideline by landlords and tenants.

The Inner City Resource Centre (ICRC) was concerned that the tribunals might lack sufficient capacity to deal with their expected caseload. As a result, the Bill had been amended to broaden the Minister’s mandate to assist the tribunals and rental housing information centres to operate effectively.

The ICRC had referred to Section 13 of the Principal Act, dealing with complaints, and had commented that tribunals were not enforcing Act 43 of 2007, which made lockouts, cutting off of services and evictions without a court order, a crime.

Adv Van der Merwe pointed out that tribunals had no criminal jurisdiction, but could refer contraventions to the police or magistrates’ courts.

The ICRC had commented on high rentals, which they viewed as a problem area, and recommended that rental control should be brought back.

Adv Van der Merwe said that as rental abuse had already been addressed in the norms and standards, no amendments were necessary.

The Organisation of Civic Rights (OCR) had stated that the issue of a dwelling’s “habitability” should be an essential, and separate, inclusion in the Bill. This had been agreed to, and the following definition had been included: “Habitability of a dwelling includes (a) adequate space, (b) protection from the elements and other threats to health, (c) physical safety of the tenant, the tenant’s household and visitors, and (d) a structurally sound building.”

The OCR had also proposed that the landlord should be required to provide a dwelling that was in a safe and habitable condition, and in a proper state of repair, at the beginning of the lease, when the tenant moved in. This provision was incorporated into the relevant section of the Bill.

Adv Van der Merwe said she needed the Committee’s guidance regarding the OCR’s suggestion that the deposit paid by tenants should be restricted to the equivalent of one month’s rental, as BASA had indicated that the normal practice was two months’ rental. As this was a policy issue, the impact of such a restriction would have to be investigated, but in the meantime, no amendments would be made. The OCR had also pressed for the deposit to be refunded upon the tenant’s vacating the premises, but this posed the problem of the landlord not having time to assess possible damage to the premises. The tenant, on the other hand, needed the refund in order to pay the rental deposit on his next home – in fact, he probably needed it a month earlier, which raised the possibility of the Department offering assistance by providing a loan guarantee.

As far as appeals were concerned, the Department had been asked to put forward proposals for a possible body to handle these, and it was hoped a solution could be put forward at the next deliberation meeting.

The South African Local Government Association (SALGA) had two main concerns – unfunded mandates and consultation. In the first instance, they were concerned about the obligation on provinces to financially assist local municipalities, which were not yet on level three accreditation, to establish rental housing information offices. This would require consultation with the National Treasury to ensure the Bill was not blocked in the National Assembly. Adv Van der Merwe said there was no need to set up separate structures, as existing personnel could be trained to deal with rental problems in their areas, at no extra cost to municipalities.

SALGA had argued that they needed to be consulted when regulations were being issued. The Chairperson had pointed out that they had, in fact, participated in consultation through the Committee, and there was also no constitutional obligation to consult with organised labour, although the mechanism existed for this to take place.

The Western Cape Provincial Government had made several comments, none of which was technical in nature, while many referred to errors in terminology, which had been corrected.  Where they had proposed that landlords should be included in the section dealing with the monitoring and alleviation of hardships, this had been done, but the emphasis remained on the Act’s impact on poor and vulnerable tenants, rather than the landlords.

The Chairperson said the impact of the Act was an important aspect, and needed to be evaluated after 18 months or two years.

Adv Van der Merwe suggested this could be achieved by including a requirement in the Bill that there should be a report to Parliament on the monitoring and evaluation every year, or alternate year.

Other issues covered included claims for compensation for damage, the development of a form to assist illiterate landlords, the option to form smaller tribunal committees, and guidance on what information should be included in the tribunal chairpersons’ annual reports.

The Chairperson thanked Adv Van der Merwe for her presentation, and asked her to resolve the outstanding issue of the composition of an appeals body. The Committee wanted to know who would be responsible, as it had been suggested that MECs could not be involved. The objective was to “close the gap” of people running to the courts to resolve their problems.

Ms Lufundo said her view was that MECs were the best people to handle appeals, although from a practical point of view, they would be using their staff and officials of the directorate to consider appeals.

The Chairperson said that if this meant the MEC could appoint an independent person to handle appeals, the Committee would have no problem with this.

Ms G Borman (ANC) said she felt the Committee had done extremely well to ensure all sections of the community were covered by the Bill.

Committee Report on Department Strategic Plan and Budget Vote
The Chairperson apologised that draft copies of the Committee Report had not been made available to Members in advance of the meeting. A number of sessions had been held with the Department since March, and all the information had now been consolidated into one document. The contents had not been edited, however. This would be dealt with after the meeting by the Committee secretary. The report needed to be adopted before next Tuesday, so that it could be included in the Announcements, Tablings and Committee (ATC) report, and could be debated the following day (May 9). The copies were distributed only to Members, who reviewed the contents.

Issues discussed included delivery agreements, where a briefing from the Department would be required, the criteria for the accreditation of municipalities, funds available for rectification and problems in implementation, the employment of retired professionals, the delay in releasing land identified for housing development, financial assistance to metros to deal with the challenges of rapid urbanisation, access to subsidies by “black-listed” applicants, problems with environmental assessment reports, and the lack of capacity to deliver in accredited municipalities.

The Committee Report was adopted, with amendments.

The meeting was adjourned.