Legal Articles

Long-term lease agreements are often overlooked as a potential form of title to property in South Africa. Instead, most commonly, focus is placed on the sale and transfer of ownership as well as short-term rentals of immovable property.

However, long-term rentals can provide more stability and security for both the owner of the property and the tenant or lessee than their short-term counterparts.

What is a Long-Term Lease?

A long-term lease entitles the lessee to a limited real right over a specified property for an agreed period of time which ranges between 10 and 99 years.

This agreement allows the lessee full use and enjoyment of the property in return for a rental fee as a means of compensating the lessor.

A long-term lease as well as all the specified terms of the agreement is registered at in the Deeds Registry. Additionally, an endorsement is made against the property’s title deed.

This provides both the lessee and the lessor more security regarding real rights and obligations of each party.

Owning a Title Deed vs. the Long-Term Property Lease

Owning the title deed of a property is undeniably the strongest form of interest and title as it entitles the owner to make use of the property however they choose, within the confines of the relevant law.

Furthermore, owners of property are entitled to make use of their property for an unlimited period of time.

However, a long-term lease ultimately limits the rights of the owner to a degree while affording the lessee a limited real right.

Limited real rights also afford the lessee the right to make use of the property as if it were their own, however, only for a specified period of time.

Once the lease period has come to an end, all rights are to the property are reverted back to the property owner.

By nature, a long-term lease agreement practically mimics ownership of property and such an agreement typically has an attached clause which allows for the renewal of the lease at the end of the term.

Payment Methods for a Long-Term Lease

The chosen method of payment for long-term rentals will mostly depend on the owner’s preference. There are two options:

• A full down payment for the full duration of the lease period. Obtaining financing for this option may be difficult or complicated.
• Payment is done in instalments of a specified amount for an agreed period of time

Van Deventer & Van Deventer Incorporated – Property Conveyancing & Transfer Attorneys South Africa

Although full ownership of a property is considered the most permanent form of ownership, a long-term lease may be a good alternative.

Contact our conveyancing attorneys in Johannesburg and Cape Town to find out more about the difference between full ownership and the long-term lease of a property.