New Court Ruling Clarifies When CPA Applies to Residential Leases

Last week, South Africa's highest court for appeals, the Supreme Court of Appeal (SCA), made a very important decision about rental agreements and the Consumer Protection Act (CPA).

The SCA has now clearly confirmed: The CPA does NOT apply to simple, "once-off" rental agreements made by private individuals who aren't actually running a business of renting out property. This provides much-needed certainty for both tenants and landlords.

The Case: Why the Tenant Disagreed

In the case of Els v Venter, the dispute started after a married couple, who had moved to Australia, rented out their old family home in Stellenbosch.

• The couple sold the house in December 2023.
• Days later, they gave the tenant three months' notice to move out (by March 2024), as allowed by a clause in their rental agreement.

The tenant challenged this notice. They argued that because the CPA applied to their lease, the landlord (the supplier) could only cancel the contract if the tenant broke the rules in a major way (a "material breach"). Since the tenant hadn't broken the rules, they argued the cancellation was invalid.

The Court's Crucial Distinction: Business vs. Once-Off

The SCA rejected the tenant's argument by focusing on the core purpose of the CPA.

The court made a clear distinction between:

1. A "Once-Off" Lease: When a private person rents out their home temporarily (like the couple who moved abroad).
2. Leasing as a Business: When a landlord is regularly marketing and renting properties as their "ordinary course of business."

The SCA ruled that "business" under the CPA means the "continual marketing of any goods or services." A private couple who only leased their home because they emigrated were not considered "suppliers" acting in the ordinary course of business.

The SCA's Ruling: Because the landlords weren't running a business, the lease was not a "fixed-term consumer agreement" under the CPA. Therefore, the CPA's strong consumer protections (like restrictions on contract cancellation) did not apply, and the landlords' termination notice was valid according to the lease terms.

What This Means for Landlords, Tenants, and Estate Agencies?

David Thompson, a Director at STBB Attorneys, says this ruling is important because it confirms that the CPA shouldn't apply to every single residential rental.

• The Key Test: To know if the CPA applies, you must look at the landlord's activity. Is the property continually marketed and leased to consumers? If so, the CPA likely applies, even if renting isn't the landlord's main job.
• The CPA's Goal: The court emphasised that the CPA is there to protect vulnerable, lower-income consumers from unfair business tactics—not to give powerful or well-resourced tenants extra legal leverage. (In this specific case, the tenant was a respected economist with equal bargaining power).

According to Robert Krautkamer (Miltons Matsemela Attorneys), this judgment is of significant value to landlords. It means that landlords who are not in the business of renting out their properties, should NOT include any reference to the CPA in the lease. If a lease is not subject to the CPA, then the common law will apply when it comes to breach. Then the parties may agree that if the tenant fails to pay timeously, the landlord may give 7 days’ notice – or even 3 days, or the agreement might even allow the landlord the right to terminate the lease, summarily. The common law allows for far greater flexibility than the CPA, which is of great benefit to landlords. 

As for pending leases, one will have to study the clauses carefully to see whether and to what degree a landlord must put a tenant to terms before being allowed to cancel the lease, despite this ruling. 

In closing then, landlords who do not lease out property in the ordinary course of business should welcome this judgment and agents should ensure, that those landlords who do not fall within this definition, are not bound down to its time frames, unnecessarily.

An Important Side Note: Eviction Rules Still Apply

While the SCA confirmed the termination notice was valid (because the CPA didn't apply), the court also reinforced a separate, critical principle under South African law:

"No one may be evicted from their home... unless they are held to be unlawful occupiers and provided that the correct procedure, as required in terms of the PIE Act, is followed when obtaining an eviction order."

Thompson notes that in this case, the eviction order the landlords had obtained was actually set aside because it was granted too early and before the tenant officially became an "unlawful occupier."

Conclusion

This judgment draws a clear line: If you're a private person leasing your home once-off, you're likely safe from the stricter rules of the CPA.

For tenants, landlords, and estate agents, this is a clear reminder to check if the CPA regulates a transaction and to make sure your lease agreement is always clear, comprehensive, and legally sound.