1 Rental Housing Amendment Bill Presentation to the Portfolio Committee on Human Settlements 2 March 2012 Report from the State Law Adviser, Legal Adviser.

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Rental Housing Amendment Bill

Presentation to the Portfolio Committee on Human Settlements 2 March 2012

Report from the State Law Adviser, Legal Adviser to the Department of Human Settlements and the Parliamentary Legal Adviser

Presented by: Adv Charmaine van der Merwe Parliamentary Legal Adviser

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Index1. General

2. Responsibilities of the Minister (2 slides)

3. Lease agreements to be in writing (3 slides)

4. Alternate Members of the Tribunal (2 slides)

5. Internal Appeal (Appeal v Review; Rationale; Making the tribunal the preferred legal route)

6. Internal Appeal - Appropriate Body to appeal to (5 slides)

7. Section 5(6)(fA)

General

Abbreviations used: DHS = Department of Human Settlements SLA = State Law Adviser PLA = Parliamentary Legal Adviser

Background DHS, SLA and PLA discussed all issues raised by the

Portfolio Committee 4 Policy issues have been identified for discussion by the

Portfolio Committee Drafting technicalities have been addressed: only 1 drafting

issue remains for decision by the Portfolio Committee3

Responsibilities of the Minister (1)

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.

DHS: These are policy requirements, which are covered by Rental

Housing programme. This may have financial implications for the Department as it

obligates the Minister to take actions necessary to alleviate hardship suffered by tenants.

PLA: Policy development may be stipulated in legislation.

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Responsibilities of the Minister (2)

2(6) For purposes of subsection (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 subsection (3) in such a manner as he or she sees fit.

DHS:The Minister will have to amend the existing Rental Housing Programme.Government may be perceived as over regulating the private relationship between parties : Generally governed by contract.

PLA Section 2(6) is not applicable to private rentals: It refers to the policy framework developed in terms of section (3).

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Lease agreements to be in writing

5(1) The Landlord must reduce the lease between him or herself and a tenant to writing: Provided that the lease will not be subject to the provisions of the Formalities in Respect of Leases of Land Act, 1969 (Act No. 18 of 1969).

(2)  The lease must contain the information set out in subsection (6).

(2A) A lease that has not been reduced to writing, shall not be invalid by reason only of the failure to comply with the requirement in subsection (1).

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Lease agreements to be in writing

Impact: Illiterate tenants can be taken advantage of Written terms bind parties – may bind themselves to unfair terms

Tenants may testify as to misrepresentations, but parole evidence rule could limit this evidence.

Verbal agreements are however difficult to prove.

South African law does not require lease agreements of immovable property to be in writing. Amendment is thus an amendment of the common law. Legal certainty : Common law should not be amended unless it

no longer sufficiently provide for the needs of an evolving society. The tool with which to amend the common law is legislation

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Lease agreements to be in writing

DHS alternate solution: Regulations : Minister to publish a standard rental agreement

containing minimum T&C, which MAY be used. The Department will promote the use of this standard document.

5(6A) The Minister must prescribe a pro-forma lease agreement containing minimum requirements for a lease agreement which may be used as a guideline by the tenants and landlords.

If the proposal is accepted, PLA recommends: The tenant to have a right to insist on the agreement being in

writing; Failure by the landlord to comply be made an offence; The standard agreements must be provided at the level of Rental

Housing Information Offices.

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Alternate Members of the Tribunal

(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 paragraph (b) of subsection (1), but such persons must have the relevant expertise contemplated in paragraph (b)(i), (ii) and (iii) of subsection (1) respectively and must serve as alternate for a member with similar expertise.

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Alternate Members of the Tribunal

Rental Housing Act – 2-4 principal members & 2 alternates. Rental Housing Amendment Bill – 7 members & up to 6

alternates Initially increased to provide for an internal appeal mechanism. Ideally alternate members should be skills linked to members.

Alternates only receive payment when they actually sit in the tribunal thus no financial impact

Abuse of situation - Tribunals sit with 4 committees: The bill must clearly spell out that the tribunal may only sit with 2 concurrent meetings.

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Internal Appeal

17A. Appeal. - (1) Any person who feels aggrieved by the decision of the Tribunal may appeal to the MEC against that decision, in the prescribed manner.

(2) The application to appeal the ruling of the Tribunal must be made in writing with 21 days of receipt of the decision.

(3) The MEC may refer the decision back to the Tribunal, or confirm, set aside or amend the decision.

(4) The Minister must prescribe the circumstances under which an application for appeal may be submitted, including the procedure for appeal.

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Internal Appeal – Appeal vs. Review

Appeals: Reviews:

Can only be lodged against a final decision (as opposed to an interlocutory decision)

Can be lodged against any administrative or judicial decision which negatively impacts on the applicant

Can be lodged against a factual finding, or a finding in law and results in a full rehearing of the merits of the case, although findings on credibility in the forum of first instance will not easily be interfered with at the forum of appeal

The hearing is limited to whether the correct procedure was followed in the forum of first instance

Limited to the material that was placed before the forum of first instance;

May bring in new material that was not placed before the forum of first instance

Suspends the operation of the order of the forum of first instance

Does not suspend the order of the forum of first instance – although the court to whom the review is directed may be requested to suspend the order

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Internal Appeal - Rationale

DHS: There may not be many appeals –What is the rationale? Tribunal’s procedures already provide internal redress.

Section 13(2) of the Rental Housing Act

Most cases are settled at mediation (stage 1) 1% of cases are taken on review (mostly public rental stock)

PLA:Tribunals created to offer an easy, fast and inexpensive way to resolve rental disputes. The Committee was concerned about the cost involved in bringing a review. Appeal are different from Reviews - Internal appeal may address a vacuum not identified by statistics.

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Internal Appeal - Making the tribunal the preferred legal route

DHS: Extending the process could force parties to approach the

courts directly. The landlord / tenant might view the process so cumbersome

that they may decide to rather avoid the tribunal all together.

PLA: Court rolls are very full, thus unlikely that Tribunal will be

avoided. The benefits offered by the Tribunal outweighs any delay that

may be caused by offering an internal appeal process.

SLA: A protracted process can be countered by providing time

limits for completion of an appeal and providing a proper structure to determine to whom an appeal will be made.

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Internal Appeal - Appropriate Body to appeal to (1)

Appeal to the Minister

Minister, HS

Delegated Office

EC FS Gau KZN Lim Mpu NC NWWC

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Internal Appeal - Appropriate Body to appeal to (2)

Appeal to the MEC

MEC, Provincial HS

Delegated Office External Advocate / Attorney

EC FS Gau KZN Lim Mpu NC NW WC

EC FS Gau KZN Lim Mpu NC NW WC

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Internal Appeal - Appropriate Body to appeal to (3)

 Within the Tribunal

Tribunal

Chairperson

Committee 1 Committee 2

Deputy Chairperson Deputy Chairperson

2 Members 2 Members

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Internal Appeal - Appropriate Body to appeal to (4)

Chairpersons of another province

Week 1: EC FS - Hearing appeals from 7 other provinces;

Week 2: Gau KZN - Hearing appeals from 7 other provinces;

Week 3: Lim Mpu - Hearing appeals from 7 other provinces;

Week 4: NC NW - Hearing appeals from 7 other provinces;

Week 5: WC EC - Hearing appeals from 7 other provinces;

(Rotation starts)

Week 6: FS GAU - Hearing appeals from 7 other provinces;

ETC

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Internal Appeal - Appropriate Body to appeal to (5)

A National Appeal Board 

DHS

 Rental Tribunal Appeal Board

 EC FS Gau KZN Lim Mpu NC NWWC

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Section 5(6)(fA)

The paragraph is enabling a 1 page contract -The contract does not have to repeat the rights and obligations set out in sections 4A and 4B and the regulations that are to be issued word for word -- The contract can merely incorporate these by way of reference to “4A, 4B and Regulations”:

“(fA) without repeating the content of the sections or regulations, a clause incorporating the rights and obligations of the tenant and landlord in terms of sections 4A, 4B and the regulations relating to unfair practice;”

“(fA) information relating to the rights and obligations of the tenant and the landlord referred to in sections 4A and 4B and the regulations relating to unfair practice;”

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Thank you