Beware of the ‘phantom’ landlord

Pam Golding Properties in the Western Cape Metro region cautions consumers to be aware of what may be termed the ‘phantom’ landlord.

“Regrettably, and particularly of late, I have come across an increasing number of scams or would-be scams perpetrated on aspirant tenants,” says Dexter Leite, Pam Golding Properties rental manager for the Western Cape Metro Region. “This is not only to the detriment of the potential tenant, who is then significantly out of pocket, but also damaging to the legitimate rental property industry, which is subject to regulation by the Estate Agency Affairs Board (EAAB).”

“While there are variations to the scam, the sequence of events which unfolds is generally along the following lines. ‘Ghost’ rental agents or agencies advertise residential properties to let via websites or print media. These are usually pegged at well below market-related rentals, with the units situated in popular apartment blocks or schemes. This has the result of inducing would-be tenants to pay so-called deposits and rentals, and sign bogus lease agreements quickly - on the basis that the tenant believes he or she is competing with a number of other tenants for the same property.”

“Having signed the lease, the tenant returns it to the bogus agent, who ostensibly has it signed by a ‘phantom’ landlord, upon which event the tenant parts with their money, never to hear from the ‘agent’ again and not having secured any real right to the premises. In some cases the deposit and first month’s rental are ostensibly paid without a lease having been signed by the parties, and ostensibly to ‘secure’ the premises.”

“In some instances the bogus agent cites the actual owner of the property as the landlord,” says Leite. “This scam is also perpetrated by someone acting or purporting to be the landlord, in other words there is no estate agent involvement.”
He says in order to ensure that would-be tenants do not fall foul of these scams, it is advisable to check that the estate agent and agency you are dealing with actually exists, that they are registered with the EAAB, and that they hold a valid Fidelity Fund Certificate.

“If it sounds too good to be true, ie the rent is too low for the property, it probably is and you are then advised to proceed with caution! It is best to engage the services of a reputable estate agent.  Then verify that the agent you are dealing with is in fact linked to the agency that they claim to represent, by calling the agency or checking the agent’s credentials on the agency’s website.

“Insist on viewing the premises before committing to anything and on meeting the estate agent in person whenever possible, unless of course you know you are dealing with a credible estate agent. If you are unsure who you are dealing with, ask whether the agent is registered with the Estate Agency Affairs Board and if necessary verify this online on the EAAB website.”

He says when in doubt, do not proceed until you are certain and satisfied in all respects regarding the tenancy on offer.

“If you are dealing directly with a landlord, ensure that the person is the owner of the property – alternatively ensure that the owner’s representative is duly authorised to enter into the lease or that the person has a real right to the property and is thus able to let it. 

“Remember to ask for proper identification. Estate agents have a legal obligation to ’know their client’ and have to comply with the Financial Intelligence Centre Act (FICA) in this regard, so they are compelled to identify and verify their client, namely, the landlord (and, if applicable, the person authorised to act on their behalf), thereby mitigating the risk. PGP advocates that the estate agency should also, as part of their processes, identify ownership of the property and act as necessary, depending on the specific circumstances.” 

He says the process becomes somewhat complicated when the property is registered in the name of a juristic entity, for example, a company or a trust, where tenants entering into a lease may not have access to the information required when assessing such ownership and authority of the person representing the owner entity. 

“A further challenge is that someone with a real right to a property, such as a tenant, can legally sub-let the property if authorised to do so by the owner. If this is the case, verify such authority and that the sub-let may subsist for the intended period.”  

“Finally,” says Leite, “do not pay deposits, rental or any other amounts until you have a lease signed by landlord and tenant with due regard to the above.”

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 19 Feb 2018
      Possibly one of the biggest sources of contention between landlords and tenants surrounds the rental deposit. “Most tenants rely on getting their rental deposits back when moving, so that they can use it to pay a deposit on their new home. Having it withheld or even having large amounts deducted can lead to a lot of distress,” explains Bruce Swain, CEO of Leapfrog Property Group.
    • 19 Feb 2018
      Situated approximately halfway between Johannesburg and Pretoria, Midrand was established in 1981 and forms part of the City of Johannesburg Metropolitan Municipality. It has become one of the major business hubs in the country with major pharmaceutical, textile, telecommunication and motoring giants situated within its boundaries.
    • 19 Feb 2018
      The PayProp Rental Index Annual Review of 2017 shows that the rental market suffered from much volatility during the year. It kicked off with rental growth spiking in January with weighted year-on-year growth (YoY) growth peaking at 8.3% before dropping to 6.34% in July, dipping down to less than 5% in November and then experiencing a slight uptick at 5.75% in December.
    • 19 Feb 2018
      While most homes in cluster complexes, estates and other gated communities come with at least one garage or carport, residents would often like additional permanent parking or storage areas for things like trailers, bikes, boats and caravans.
    • 16 Feb 2018
      Whether you own a property in a sectional title complex or are looking to invest in one, the financial standing of the body corporate is the single most important thing that can affect your investment or your buying decision.
    • 15 Feb 2018
      One positive consequence of the financial crash in 2008 was the rise in consumerism, especially in the property market, where buyers have steadily become more knowledgeable and more value conscious.
    • 15 Feb 2018
      While most homeowners will take the agent’s commission into consideration when they are trying to determine what the will get out from the sale of their property, many often forget to factor in the other costs involved in a home sale, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 14 Feb 2018
      The forecast for the national rental market in 2018 remains a mixed bag of good news and bad news. Although rentals are expected to rise slowly as the challenges of home affordability and tighter lending criteria tighten their grip, it’s a double-edged sword as the market also will come under increasing pressure from factors like declining disposable income levels.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us