Property maintenance is not just about getting and keeping a good tenant in a residential or commercial property asset to ensure continuous occupation, rental income and cash flow. It’s also about ensuring capital appreciation and complying with various regulations that relate to the safety of occupants, workers and visitors.
A startling statistic revealed by the latest TPN Tenant Survey is that almost 30% of tenants say their biggest challenges relate to landlords not attending to repairs and maintenance. Another major challenge is facilitating access to repairs and maintenance given the coordination required between various parties, which in most cases include a tenant, landlord, managing agent and contractor, at a convenient time with minimal interruption.
Commercial properties
In the case of commercial properties, responsibility for repairs and maintenance are clearly agreed in a lease agreement. There are two common approaches to maintenance in a commercial property. In the first approach, known as a triple-net lease agreement, maintenance is squarely the responsibility of the tenant, including all services and assets such as air conditioning, fire equipment and waterproofing, amongst others.
The second approach applies to shopping centres or where multiple tenants share a property. In this approach, maintenance is controlled by the property owner or manager with the costs related to maintenance usually recovered from an occupier or covered by an agreed operating cost structure.
The most prevalent piece of legislation regulating the maintenance of all commercial property classes, including industrial, retail and office properties, is the Occupational Health and Safety (OHS) Act which requires that employees and residents are provided with a safe working and operating space. This extends to visitors to a place of work and consumers in a store or shopping centre. All property with a shared use reason must comply with the OHS Act which incorporates elements such as lifts, escalators, fire equipment and the overall cleanliness of the property, ensuring that those who are using it or occupying it do so in the knowledge that it is safe. Failure to meet these obligations can have severe consequences for property owners and managers responsible for the properties. In a nutshell, the OHS Act is in place to ensure that properties are safe to use.
Residential properties
In the case of residential properties, landlords are responsible for routine repairs caused by normal wear and tear, ensuring the property remains in good condition, meets health and safety standards and for repairing any damage to the property, unless the damage was caused by the tenant, in which case the cost can be recovered from the tenant.
The Rental Housing Act regulates residential lease agreements, outlining the rights and responsibilities of both parties in a landlord-tenant relationship.
Sectional title schemes, an increasingly popular residential option, are regulated by the Sectional Title Management Act. In a sectional title scheme, the body corporate is responsible for maintenance, upkeep and repairs to all common areas such as the outside of the building, roof, common gardens, driveways, security system, communal passages and walkways, staircases and shared swimming pools. The body corporate is also responsible for maintenance and repairs to exclusive use areas – defined as areas which are part of the common property, but which have been reserved for the exclusive use of an owner such as garages, parking areas and private gardens – with the costs of the maintenance and repairs borne by the owner. Body corporates who are negligent in fulfilling their duty to maintain and upkeep common property can be held legally liable.
TPN’s research reveals that security is ranked as the biggest consideration for tenants finding a property which is not surprising considering that safety and security remains one of South Africa’s biggest challenges. Sought-after rental properties typically have security measures in place. Most landlords spend heavily on ensuring that their property – and the property of their tenants – are kept safe. The cost of security has increased substantially over the years with additional investments in CCTV, boundary protection and access control continuing to increase.
Due to the lack of security and service delivery in most municipalities, businesses and residential residents are increasingly looking to City Improvement Districts (CID), clearly defined geographical areas where property owners pay additional rates to fund supplementary services. These include private security, infrastructure maintenance and upgrades, roads and public spaces like parks and gardens. Although CIDs are usually situated in commercial nodes, they have become an attractive alternative for residential suburbs. CIDs are governed by the Municipal Property Rates Act, The Companies Act, the SA Constitution and a municipality’s by-laws.
Although loadshedding now appears largely resolved, the effect of water interruptions and restrictions due to a lack of infrastructure development and proper maintenance are starting to be felt. In the same way that solar panels and energy-efficient technologies helped to mitigate the risk of loadshedding, could a better awareness of consumption and improved efficiencies follow the same path? Time will tell.
30% of tenants say maintenance is their biggest challenge
Landlords are required to perform regular maintenance and repairs as necessary in order to avoid serious consequences. Routine maintenance inspections and audits are mandatory under the OHS Act. A failure to conduct regular inspections can lead to heavy fines or even imprisonment. Neglecting proper repairs and maintenance can also impact liability protection and insurance coverage given that insurance companies typically include reasonable repairs and maintenance within their policies. Failing to prove compliance can result in denied claims.
The bottom line is that property owners are typically responsible for repairing and maintaining rental properties. It is in their best interests to do so timeously and efficiently in order to retain tenants, safeguard their investment and comply with regulatory requirements.
About TPN from MRI Software
The only credit bureau globally to specialise in tenant behaviour, TPN from MRI Software created the world’s first rental payment profile. Its database has grown to become the most comprehensive and up-to-date authority on tenant behaviour in South Africa, covering both the residential and commercial sectors and transforming the way tenants pay their rent. TPN’s unique data is widely used by organisations such as the South African Reserve Bank (SARB), commercial banks and industry bodies. TPN was recently acquired by MRI Software, an established global leader in residential and commercial real estate software.
