Many landlords have been startled to learn that, despite carefully prepared written lease agreements, there are statutory provisions which restrict their rights and create obligations vis a vis their tenants.
Landlords often first learn about the controls contained in the Rent Restriction Act (the “Act”) at the least opportune time, for example, right before trying to evict a tenant who has gone several months without paying rent.
In Jamaica residential rental properties tend to be used as an investment vehicle of choice, it would do you well to know in advance some of the statutory controls which limit your contractual rights as a landlord.
The Act applies to all building land, residential properties, public buildings, and commercial buildings whether rented furnished or unfurnished. These are known as “controlled premises” according to the Act. The Act will not apply to:
- A residential property let at a rent which is a genuine payment for room and board;
- A lease for building land for a term of twenty-five years or more;
- A residential property let by the Minister in accordance with the provisions of the Housing Act;
- Residential properties declared exempted by the Minister; and
- Public or commercial buildings for which the Landlord has received a Certificate of Exemption.
If your rental property is a controlled premises you may wish to consider the following 3 provisions of the Act which affects your tenancy:
- Implied Terms
Section 4 of the Act states that in every tenancy agreement or lease made, whether orally or in writing, in respect of a controlled premises the Landlord and Tenant will be deemed to have included certain terms in the lease agreement. These implied terms, in some cases, fix the landlord with duties that are enforceable by the tenant such as, obligations to repair and maintain the premises, an indemnity in favor of the tenant should any loss occur due to the landlord’s negligence, and an obligation on the landlord to pay all applicable taxes in respect of the premises.
Tenants are also fixed with certain implied obligations and duties. These include, limited repair obligations, permitting the landlord to enter and inspect the premises, and an obligation not to sublet the premises.
The Act allows the parties to opt out of these implied provisions and to insert in their own written agreement alternative terms.
Though some of the implied provisions are helpful to the landlord, it is best practice to intentionally include, and in appropriate cases to exclude, terms which are unsuitable for the specific arrangement which you intend to have with your tenant. This ensures that both parties are aware of these expectations and their respective responsibilities. Both parties may wish to include terms that differ from the above in relation to certain specifications or which party should be responsible for what.
One example of tailored clauses in lease agreements involves very specific repair obligations. Some leases may indicate that the tenant is responsible for all repairs up to a certain dollar value or may make the landlord wholly responsible for all repairs not caused by the tenant’s intentional or negligent conduct.
The ability to design terms, such as these, which meet your specific needs is often your best insurance against litigation arising from breaches of the leasehold conditions.
- Determination & Increase of Rent
The Act requires that any landlord proposing to lease a controlled premises must, before letting the property to the tenant, apply to the Assessment Officer of the Rent Assessment Board and have the standard rent determined. This amount will be reflected in the lease agreement as the rent to be paid.
If the rent stated in the lease agreement exceeds the standard amount permitted, notwithstanding any term in the agreement consenting to the exceeded amount, the Act provides that the excess rent will be irrecoverable from the tenant. If the excess has already been paid, the Tenant will be able to recover the amount from the landlord through a Court Action.
These provisions tend to be more honored in the breach, however, landlords should be sure to conduct their due diligence in this aspect to avoid the unfortunate surprise that a portion of the rent they are charging is unrecoverable or that they are in debt to their tenants.
The statutory controls apply not just to setting the rental amount, but also to periodic increases as well. Regulations under the Act provides that the standard rent may be increased by 7.5% per year, without approval from the Board. There are circumstances, however, in which permission to increase the rent should be sought by the landlord. These include:
- Where the landlord has incurred expenses executing substantial improvement or structural alterations to the premises, substantial improvements to the amenities of the premises or to the locality of the premises which the Tenant benefits from; and
- Where rates and taxes in relation to the premises, other than that of water and sewage rates, have been increased.
Landlords must be careful follow the procedures set out to have the standard rent determined and ascertain when permission is required to increase rent.
This is often the biggest surprise to landlords.
Where the procedures set out by the Act are not complied with, landlords runs the risk of termination being invalid, even where they have strictly followed the terms of a written lease agreement.
In most cases, landlords are required to issue a notice to quit, stating at least one of several prescribed valid reasons for the termination of the tenancy. The valid reasons considered include non-payment of rent for more than 30 days, the landlord requiring the premises for their own use or for use by their dependent, or the property being required for repair.
The buck does not stop at merely stating the reasons, if a tenant remains in possession of rented premises after the expiration of a notice period, the landlord is required to obtain a Court order to remove them. In applying to the Court, the landlord is required to prove the reasons stated in the notice. This is not always a simple task. For example, the Supreme Court has determined that a landlord who is seeking to recover possession of premises in order to give vacant possession to a purchaser does not require the premises for their own use within the meaning of the Act. Additionally, if a tenant pays all the rent outstanding during the period of the notice to quit, the notice is unenforceable.
What may be more surprising is that the tenant enjoys statutory protection from any act by the landlord to remove them or otherwise interfere with their enjoyment of the property. Should a landlord violate this protection, they may be found guilty of an offence and be liable to a term of imprisonment not exceeding 12 months.
Understanding these key terms which affect your lease agreements may be essential to avoiding unpleasant surprises. It is recommended that landlords, and tenants, seek legal advice to have a clear understanding of their rights and obligations before entering into tenancy arrangements.
Kandi Chin is an Associate at Myers, Fletcher & Gordon in the Property Department. She can be contActed via Kandi.Chin@mfg.com.jm or myersfletcher.com. This article is for informational purposes only and does not constitute legal advice.