Short Term Letting in Sectional Title Schemes Article

[Prepay Guru]

This article might be of interest to some members. Not directly
related to prepayment but an ideal customer base.


Short Term Letting in Sectional Title Schemes By Jennifer Paddock
There are residential sectional titles schemes situated in prime
positions all around South Africa. Within these schemes are sections
so stunning that they knock the socks off some of South Africa's hotel
rooms. With art‐deco style lofts in city centres and luxurious seaside
apartments with views of the ocean that go on forever, it is no wonder
the light bulb has lit up in many owners' heads saying "hey! I could
make more money renting this place out to tourists than I could doing
anything else with it!". So they get themselves a rental agent,
holiday letting agent or even get entrepreneurial and start a short
term letting operation themselves. However, there are numerous
problems associated short term letting in a scheme where many of the
owners are permanent residents. Come summer holidays, there are
suddenly unfamiliar faces in the holiday spirit cruising in and out of
the scheme. This is not to say that short term letting operations
should not be allowed, owners will inevitably have different
requirements from their units, and investor owners will be looking to
maximize the return on their investment. However, it is important to
recognize the obvious tensions between short term holiday makers, and
long term residents. Short term letting operations should be managed
closely, and must be operated in line with the schemes rules in order
to avoid the holiday makers causing a nuisance to other residents. In
order to rent out your unit on a short term basis you will need to
ensure that there are no restrictions against shortterm letting
applicable to your scheme. If the prescribed management and conduct
rules made under the regulations to the Sectional Titles Act 95 of
1986 ("the Act") apply to your scheme in their prescribed form then
there is no rule restricting short‐term letting applicable to your
scheme. In the absence of a title deed condition restricting this
activity you can be fairly confident that there is no restriction on
short term letting full stop. If however the developer or body
corporate has amended the prescribed rules there could be a rule
restricting shortterm letting so be sure to check the rules filed in
the scheme's file held at the Deeds Registry to be sure. If on the
other hand you are an owner opposed to short term letting and there is
no relevant rule or title deed condition restricting short term lets
in your scheme, you may consider chatting to fellow and like‐minded
owners and to the trustees to start the process of adopting a rule to
this effect. Such a rule is considered to be a substantial detraction
from an owner's ownership rights and therefore one needs to be able to
show that the adoption of this rule is a reasonable reaction to a real
nuisance. The Act also requires that all rules must be reasonable and
must apply equally to all owners of units put to substantially the
same purpose. Therefore your rule needs to be carefully drafted so as
to take these requirements into account. Once the rule is drafted,
preferably by an attorney, it must be adopted in accordance with the
strict procedures laid down by the Act and it will only become
enforceable once it is filed in the schemes file held at the relevant
Deeds Registry. Remember also that these rules may be challenged by an
owner who has been engaged in the short‐term letting business and
therefore the rule and adoption procedures need to be squeaky clean if
it is to stand up to the scrutiny of an arbitrator or a judge.
Paddocks Press Volume 4, Issue 4, April 2009