Tough economic conditions in South Africa have seen an increase in the number of cases that legal firms offering debt collection services handle.
Mlambo says buy-to-let investors should make use of highly competent rental agents to ensure they do not end up with defaulting tenants.
According to Ntombi Mlambo of Gunstons Attorneys, the big challenge facing legal firms is tracing the debtor.
She explains that there is a tendency especially among landlords and rental agents to heave a sigh of relief when a poor tenant leaves and to write off large sums owing – because the new address to which the defaulter claims he will be moving too turns out to be bogus and by the time a summons is served, the tenant will have moved on.
Mlambo says in situations such as these, defrauded landlords do no one a favour by letting a defaulting tenant get away with non-payment because experience shows that they will do the same thing again.
Owners in the sectional title sector have in the last year also been slack about meeting levy payments and they currently comprise a very big share of the defaulting group with which South African debt collectors are dealing with, she says.
Mlambo urges property owners and estate agents who find themselves in these situations to always use a tracing service.
“We find that over 70 percent of defaulting debtors are eventually traced, especially if we have a copy of their ID books and a photograph.
It is not that easy to disappear,” she says.
Illegal immigrants have proved the most difficult to bring to justice.
They may have access to false identity papers and can change their names from time to time and place to place – but this type of crook is not that common, says Mlambo.
Mlambo says buy-to-let investors should make use of highly competent rental agents to ensure they do not end up with defaulting tenants.
She says they have come across estate agents who have less than 3 percent defaults and less than 10 percent late payments.
Others report 15 to 20 percent defaults and 50 percent late payments thus making the choice of a rental estate agent crucial. – Denise Mhlanga
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