FAQ about the impact of lockdown on real estate industries
Questions and Answers about the impact of lockdown on real estate industries
The unprecedented 21-day national lockdown kicks in at midnight Thursday 26 March 2020.
President Cyril Ramaphosa announced the bold effort to stave off the rampant Coronavirus that has gripped the world.
The lockdown will have dire consequences for the economy and the manner in which business is conducted in the property and real estate industry.
The EAAB has compiled a short list of questions currently coming through various platforms and we have endeavoured to provide concise answers.
Q: A notice with a government letter head is being circulated stating that no rental will be collected during the lockdown period. Is this true?
A: No, this is fake news. All rental agreements should be honoured. Tenants whose income is affected by the lockdown can however apply for relief from funds made available by government. (see more detail below)
Q: How should rental contracts that are ending in the 21 day lockdown period be handled in relation to tenants moving out and new ones moving in?
A: The regulations of the Disaster Management Act are clear in terms of restricted movement and relate only to essential travel. Tenants will not be able to vacate property during the lockdown. Affected parties should negotiate a reasonable and fair arrangement where pro rata rental payments can be made and contracts amended to facilitate the changes. Such agreements can be recorded telephonically and electronically.
Q: What happens to deposits that are currently sitting in trust funds and what are the consequences if these funds are misused while the deeds offices are closed during the lockdown?
A: In terms of section 32(1)(e) trust monies deposited into a trust account shall be retained in a trust account until the estate agent is lawfully entitled to it or instructed to make payment , there from to any person. During the lockdown period, estate agents are required to maintain their trust accounts as prescribed above. Any agent who misuses the trust account can be charged for contraventions of the Act.
Q: Continuing Personal Development payments are due at the end of March. Can you please consider extending the deadline for payment until end April or May as estate agents won’t be able to earn an income during the lockdown?
A: The EAAB is cognisant of the financial pressure that many estate agents will be subjected to due to the loss of income during the lockdown. As such, the EAAB is extending the payment period for CPD fees to 31 May 2020.
Q: What guidance can the EAAB provide in terms of rental relief for companies or individuals who cannot honour their rentals because of the lockdown?
A: The President announced several relief measures which can be accessed by individuals and businesses to mitigate the impact of the pandemic. This includes a special National Disaster Benefit Fund which will pay Unemployment Fund benefits for up to three months to qualifying workers whose income has been affected. A debt relief fund has also been set up to help mitigate the impact on SMMEs and assist with issues like rental. It is advisable that companies utilise these relief measures to ensure they pay rent for their business and also pay their employees’ who have to pay personal rental. Where possible, tenants are also advised to try and negotiate payments with their landlords.