A Real-World Case Study with Legal Insight from Ismaiel Mohamed, Director of MML Inc. Attorneys
A recent query from an agent prompted a deep dive into a legal and practical dilemma that’s more common than you might think:
“Can a new owner of a property increase the rent or change the lease terms (like excluding previously included water, electricity, and Wi-Fi) if the fixed-term lease was signed by the previous owner?”
At first glance, many rental agents and landlords will confidently point to the well-known common law principle of huur gaat voor koop — the lease survives the sale. In other words, the new owner steps into the shoes of the old owner and inherits both the benefits and obligations of the lease agreement.
But things got a lot more interesting once we looked at the lease details…
Key Lease Terms
- Rental: R4,500.00/month
- Term: 1 March 2021 to 30 April 2026 (a fixed term of more than 5 years)
- Utilities: Included in rent, unless abused
The CPA & Fixed-Term Leases Beyond 24 Months
If both the landlord and tenant are natural persons, the Consumer Protection Act (CPA) applies. And under the CPA, a fixed-term lease longer than 24 months is only enforceable if the extended duration confers a demonstrable financial benefit to the tenant.
This means:
👉 If the lease does include a financial benefit (such as water/electricity/Wi-Fi included at a set rental for five years), then the long-term lease stands — and the new owner is bound to those terms until April 2026.
👉 If the lease does not offer a clear financial benefit to the tenant, then the lease will only be enforceable up to 24 months. Thereafter, it defaults to a month-to-month arrangement, and the landlord can terminate or renegotiate with the required notice.
So What About the New Owner?
If the long-term lease is valid and enforceable, the new owner cannot:
- Increase the rent,
- Remove included utilities, or
- Alter the terms unilaterally.
Even if the new owner was unaware of these clauses when purchasing the property, they are still legally bound by them — a critical reminder for property buyers and their agents to review lease agreements before transfer.
Legal Insight from Ismaiel Mohamed – MML Inc. Attorneys
“There must be a financial benefit to the tenant to allow the lease to be longer than 24 months. If there is such a benefit in this lease, then whether or not the landlord was aware of the lease terms, he will be bound by them. He therefore cannot alter the terms. If there is no benefit, then this lease would have ended after 24 months, and is now on a month-to-month. The landlord will still be bound to the old terms until the lease is properly terminated.”
Key Takeaways for Agents & Landlords
- Always check lease term and content before assuming a new landlord can make changes.
- Ensure tenants are not taken advantage of during an ownership change — lease protection continues.
- Help investor clients understand the legal implications of buying properties with existing tenants and fixed-term leases.
Excellent! thank you always.