Rental Advice: How Does 'Huur Gat Voor Koop' Work?

Real estate investors who decide to sell a residential property where there is still a tenant in residence need to be aware of the “huur gat voor koop” rule in SA law.

What is basically means, says Greg Harris, CEO of Chas Everitt Rental Properties, is that the lease takes precedence over the sale when a rental property changes hands.

The practical effects of this are that:

The tenants who have a lease have a right to stay on in the property until the term of that lease expires – even if the property is transferred to the new owner before that date; and
The seller needs to ensure that the buyer of the property is aware that it is currently tenanted and that the tenants cannot be asked to move out before the end of their lease.

“Of course this could be a problem for prospective buyers who are considering the property with the intention of living in it themselves, but buyers who are also investors might be glad to purchase a property that already has a reliable tenant in place and is thus already generating an income.”
From the tenants’ point of view, Harris says, a change of ownership might make them uncomfortable, especially if their lease does not have long to run and they are concerned that the new owner might raise the rent or otherwise change the terms of their tenancy.
“However, we strongly suggest that before they start making plans to move, they should check their lease to see what it says about the property being sold while they are still in occupation."
“In some cases, they may find that there is actually a provision that gives them the right to cancel the lease without incurring any penalty if the property is ever listed for sale. But in most cases there will not be any such provision and what that means, thanks to the standing ‘huur gat voor koop’ rule, is that the lease will remain in effect as is under the new owner, and that both they and the new owner will be obliged to abide by its terms and conditions until it runs out."

“In other words, if they try to cancel their lease and move out before it expires, they could well have to pay a penalty of some kind.”
Consequently, he says, tenants who find themselves in this situation would do far better to meet with the new owners or their managing agent and try to find out what their plans are. “They might be pleasantly surprised to find that the new owners would really like them to stay on and are quite amenable to renewing the lease very much on the current terms. 
“Alternatively, if the new owners are planning a major change, the tenants will at least know what is coming and have sufficient time to find new accommodation, hand in their notice according to the lease and get their deposit back without any acrimony - and without incurring any penalty.”

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 24 Nov 2017
      Demand for secure estate living in Hout Bay has risen sharply in recent years, precipitating a spike in development with estate homes now accounting for 20.24% of the property landscape with the launch of an exclusive new gated development on 26 November adding 20 more units to the existing 1250 estate homes.
    • 24 Nov 2017
      There are some things that money can’t buy – spectacular views from Mouille Point to the V&A Waterfront and a trendy and lively neighbourhood that encapsulates the very best of the Cape Town lifestyle.
    • 24 Nov 2017
      Tshwane’s four-bedroom Mayoral mansion, nestled among ambassadorial residences in the upmarket suburb of Muckleneuk, fetched R5.1 million after spirited bidding at High Street Auctions’ final sale of the year.
    • 23 Nov 2017
      Reserve Bank Governor, Lesetja Kganyago, said that the Monetary Policy Committee had once again decided to let the interest rates remain unchanged with the repo rate at 6.75%, and the prime lending rate at 10.25%.
    • 23 Nov 2017
      As the holiday season approaches, most of us are counting the days until that year-end bonus hits our account. There’s nothing quite like a little bank balance booster to get us in the holiday spirit.
    • 23 Nov 2017
      The Adelphi Centre (now entitled “ARTEM") in Sea Point, Cape Town, is being extensively renovated, and once complete will offer an ultra-luxurious galleria style shopping centre unlike any other seen on the Atlantic Seaboard or in Cape Town.
    • 23 Nov 2017
      If you are looking to sell your home in today’s real estate market, there are certain things that you need to include both inside and outside your house. Today’s generation of home buyers is looking toward a more eco-friendly, energy and water conscious home, and if your house stands out then you are more likely to be able to sell it.
    • 22 Nov 2017
      Most people know of the Community Schemes Ombud Service (CSOS) and that levies must to paid to fund its operations. In this article the experts at Paddocks will address some of the issues that are causing confusion.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us