Housing is rented from the Johannesburg Social Housing Company, and tenants do not become the owners of the property, the group says.

THE Johannesburg Social Housing Company (Joshco) only provides rental accommodation to residents in the lower income bracket, and tenants can’t claim ownership or don’t become the legal owners of the property they’ve rented for a number of years.

Rory Gallocher, Joshco CEO“That is a very common misunderstanding that exists in rental housing,” says Rory Gallocher, Joshco’s chief executive officer. “A lot of our clients ask to get ownership of the unit after four years. Government policy is that if government puts institutional subsidies into the construction cost of the unit, Joshco has the option to offer ownership [to] the occupant but may not do so until a minimum of four years has expired.

“That is not the same as saying that after four years has expired, we are compelled to give ownership,” he explains.

Joshco is the City of Joburg’s rental housing agency. It develops, refurbishes and manages quality and affordable mixed-density units for households earning a combined monthly income of between R3 500 and R7 500.

If it was to offer tenants full ownership of its properties, an instalment sale contract would have to be signed and then ownership would be passed on to the tenant once they had paid the capital cost. However, Joshco’s tenants only sign open-ended contracts, which don’t provide for them to take full ownership of the property that they have rented after a certain period.

Lease agreement
“Joshco doesn’t offer ownership; we offer leases. If our units were for sale we would be doing a disservice to all those deserving poorer families who need affordable discounted accommodation.”

Before they sign a lease agreement, applicants are screened for approval. They need to submit personal and employment details so that Joshco can do an assessment of affordability. Then, all the terms and clauses of the standard rental lease agreement are explained to successful applicants before they can sign the contract and move into a Joshco property.

“Everybody before they put ink on paper has been trained. It is a very good, legally sound and easy to understand lease contract. There is no legitimate room for confusion,” Gallocher says.

Tenants should read their lease agreements carefullyThe seven-page lease agreement includes Joshco’s and tenants’ responsibilities. It notes that the company will provide affordable rental accommodation, ensure the safety of tenants, maintain and repair the property, provide cleaning services and insurance, do alterations and improvements on units, spell out the terms of breach of contract by tenants and provide the domicilium citandi et executandi.

In exchange, tenants must pay the monthly rent in advance or before the first day of each month. Absa prime rate interest will be charged on all arrear payments.

Deposit
Tenants must pay two months’ deposit before they can occupy a flat. “The first month is the damage deposit in case the tenant doesn’t look after the unit and when they move out we have costs to repair the unit. The second deposit is the last month’s rent,” says Gallocher.

Tenants are refunded their deposit or any balance held by Joshco when the lease contract is ended, within 14 days after the company “has satisfied itself that no further amounts are payable or owed”, the lease contract stipulates.

Tenants may not without the prior written consent of Joshco, cede any rights to any third party or sublet the unit. If they do, the company will cancel the contract.

“You cannot sublet the property because the lease agreement is between Joshco and you, not another third party. If you don’t need the property anymore you must give notice. If you sublet Joshco’s unit you will be probably prejudicing the next person who is entitled to get occupation and that would not be right,” Gallocher explains.

“Another reason why we don’t allow subletting [is] because it is very often corruption related.”

Subsidy
Tenants may also not allow more than the number of people described in the schedule to occupy the unit. Joshco gives priority to the next of kin of tenants who have passed away, provided that they comply with and qualify to receive the subsidy benefits and in accordance with the policies and rules of the department of housing.

BG Alexander in the inner cityIf a tenant breaches any of their obligations in the lease, they will be sent a notice demanding that they rectify the breach within a given period. They will also be told what Joshco will do if the breach is not rectified. The company can cancel the lease and evict the tenant.

If a lease agreement is cancelled, the flat will be repossessed and the company will work to recover all outstanding payments.

Joshco uses an approved credit control policy and procedure to administer rental payments. Tenants are contacted for monthly payments and reminders and letters of demand are sent out.

Tenants who default on their rent or don’t settle arrears are given about 120 days before they are served with an eviction notice. Where a tenant has acted contrary to the terms of the lease agreement, this will be seen as a breach of contract.

Arrears
“If tenants fail to contact Joshco to make arrangements for settling outstanding arrears or if they sign an acknowledgement of debt but fail to honour that arrangement, such accounts are handed over for legal processes to commence until eviction stage,” Gallocher says.

However, he notes that the legal process is often not favoured because it is protracted.

If a defaulter signs an acknowledgement of debt, they have to pay their current rent every month as well as a contribution towards their arrears. “Then we exclude them from the legal handover process. As long as we can see that the defaulter has good intentions.”

Gallocher reiterates that Joshco doesn’t give tenants a licence that allows them to own its property after a certain period. “A very large percentage of our clients or tenants are very, very poor which means they are either unemployed, receive disability grants or old age pensions. Our vacancy levels are minute. The demand for affordable housing is vast.”

The company intends expanding its housing portfolio to more than 10 000 units by June; its aim is to develop over 11 000 housing units in Joburg. It currently manages about 7 600 rental units; of these, only 930 are instalment sale for ownership.

Projects at the moment include AA House on Wanderers Street in the inner city; the third phase of Antiat in Industria, a former hostel turned into family units; Linotex emergency accommodation and transitional housing; 146 in New Doornfontein; Selby Hostel near the M2, which has been converted into family units; and the Kliptown Golf Course.

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