MONEY CLINIC | Is it legal for our landlord to charge us a R500 late penalty fee during Covid-19?

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A Fin24 reader financially affected by the coronavirus outbreak has been charged a penalty every month for late rental payments. He wants to know if he is legally obligated to pay it.

He writes:

My wife and I have been affected financially by the Covid-19 pandemic, just like everybody else. We have been making partial payments for our rent, but always clear the balance by the time the next bill comes.

Our problem is the rental agent is charging us a R500 penalty every month for late payment and still demands the rent in full. No eviction threats have been made yet.

Is it really legal for them to put the penalty on us every month, because this has inflated our rent amount by R500, and who knows how long this coronavirus crisis and lockdown is going to last?

Liad Hadar, Director at Hadar Incorporated Attorneys & Conveyancers responds: 

Dear Reader

Assuming that you are referring to a residential lease, late payment penalties are specifically prohibited in terms of the Rental Housing Act 50 of 1999, read with Section 3(c)(i) of the Unfair Practices Regulations:

“3 – Leases

(c) A lease agreement must not include any provision which –

(i) imposes a penalty for late payment of rent whether or not the penalty takes the form of administrative charge or any other form other than interest;”

You are therefore entitled to demand that the landlord remove such late payment penalties from your invoices.

Please note however that the landlord is entitled to charge you interest on such late penalties.

Please note that the above only automatically applies to residential premises and leases. By and large, late payment penalties are allowed in commercial or retail premises and leases.

Questions may be edited for brevity and clarity.

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This article was amended at 19:59 on 20 May 2020 to reflect that the landlord may charge interest, but not a set late penalty.

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