A fee’s label is not the whole legal analysis. In South Africa, a separate “lease drafting” charge deserves careful scrutiny because the Property Practitioners Act addresses who must draft a letting agreement for their own account.
Quick answer: Section 68(1) of South Africa’s Property Practitioners Act says an agreement to let and hire property must be drafted by the developer or seller, as applicable, for that party’s own account. That gives a tenant a strong reason to question a fee that simply pays for preparing the lease. It does not automatically prove that every fee called a “contract setup,” “tenant administration” or “application” fee is unlawful. The real questions are what service the charge covers, who engaged the practitioner, how the amount was disclosed, what the written terms say and whether the charge complies with the applicable regulatory and rental-housing framework.
Editorial note: This article uses an anonymized summary of user-provided material. It does not determine whether any named agency or landlord has broken the law. This is general information, not legal advice. South African rental disputes can turn on the wording of the listing, application terms, lease, invoice and mandate.
A Common Rental-Listing Problem
Imagine finding a Cape Town rental listing that shows a monthly rent and then lists several additional amounts: an application or screening fee, a separate lease-drafting fee, VAT on that fee and a recurring tenant-service or portal charge.
The applicant’s concern is not only the total amount. It is also whether the listing is splitting one landlord or agency cost into multiple line items, and whether calling a charge “lease drafting” or “contract setup” changes who should pay it.
That distinction matters. A background check, a landlord’s management commission and the cost of preparing the lease are not necessarily the same service. Treating every extra line as one category makes it harder to identify the legal and contractual issue.
Start With the Type of Fee
Before deciding whether a charge is lawful, identify what it is supposed to pay for.
| Fee label | What to ask | Why the distinction matters |
|---|---|---|
| Application or screening fee | What screening service is provided? Is the fee disclosed before the application? Is any part refundable if no lease is signed? | This may be different from the cost of preparing the final lease, but the terms and actual service still matter. |
| Lease drafting or contract setup fee | Is the fee only for preparing, editing or signing the lease? Who requested that work? | Section 68(1) makes the ordinary drafting cost of a letting agreement a key issue to challenge. |
| Landlord management fee or commission | Is this paid under a separate mandate between the owner and the agent? Is the tenant being asked to pay it directly? | A fee owed under an owner-agent arrangement is not automatically the same as a tenant charge. |
| Tenant portal or administration fee | What continuing service does the tenant receive, and where is it authorized? | A recurring service charge should be analyzed separately from lease drafting. |
| VAT | What is the underlying taxable supply and who is the supplier? | Adding VAT to an amount does not, by itself, make the underlying charge valid. |
The name printed on an advertisement is evidence of how the charge was presented. It is not a regulatory ruling. A “contract setup fee” can still need to be examined if the work is simply the preparation of the lease that the lessor or property practitioner was expected to arrange.
What Section 68 of the Property Practitioners Act Says
Section 68(1) of the Property Practitioners Act 22 of 2019 provides that an agreement to sell and purchase or to let and hire property, or the mandatory disclosure form referred to in section 67, must be drafted by the developer or seller, as the case may be, for that party’s own account.
For a tenant, the practical takeaway is straightforward: if an agent is charging a separate amount merely for producing the ordinary lease, ask why that cost is being passed to the tenant and what legal or contractual term authorizes it.
But section 68 should not be stretched into a conclusion that every fee appearing in a rental advertisement is automatically prohibited. A regulator or court may need to examine whether the charge covers drafting the lease, a genuinely separate service, an optional product, a third-party cost or something else. The wording of the listing and the label chosen by the agent are relevant, but the substance and documents matter more.
The Act also gives the Property Practitioners Regulatory Authority (PPRA) a consumer-protection role. The PPRA’s mandate covers property practitioners’ conduct in marketing, managing, letting, renting and hiring property. The 2022 regulations and Code of Conduct include duties concerning integrity, care and skill, compliance with the law and consideration of other parties’ interests.
Why the Tax Argument Needs Care
A common argument is that an owner can deduct an estate-agent agency fee from rental income, so the tenant cannot be required to pay it—or that a tenant-paid amount automatically creates tax fraud if the owner claims it.
That is too broad. The South African Revenue Service guidance on rental income says that agency fees may be permissible deductions when they are incurred in producing rental income and meet the applicable requirements. It does not decide who owes a particular fee under a lease or mandate.
Tax treatment and rental-law responsibility are separate questions:
- Rental-law question: What service is being charged, and does the lease or statute permit the tenant to be charged for it?
- Contract question: Who agreed to pay, and was the charge clearly disclosed before the tenant applied or signed?
- Tax question: Did the person claiming a deduction actually incur a permissible expense under the tax rules?
Do not accuse an owner or agent of tax fraud based only on a fee appearing in an advertisement. If there is a genuine tax concern, preserve the documents and obtain advice from a qualified tax professional or the relevant authority.
A Practical Fee-Review Checklist
Before paying or signing, save the complete version of the listing and ask for a written fee schedule. Then collect:
- the advertisement as it appeared on the date you applied;
- the application form and all linked terms;
- the proposed lease and annexures;
- the invoice, VAT details and payment instructions;
- proof of every payment, including application or deposit payments;
- the name of the legal entity receiving each amount;
- any description of the service supplied for each fee;
- the owner-agent mandate or written explanation of the agency’s authority, if available; and
- all emails, messages and calls summarized in a dated note.
The goal is to answer one question for every line item: what did I pay for, who requested it and where did I agree to pay it?
Questions to Send Before You Pay
Keep the request neutral and specific. For example:
Please provide a written breakdown of each amount payable in addition to the monthly rent. For the lease drafting or contract setup fee, please confirm the exact service supplied, who engaged the agency to perform it, the contractual clause authorizing the tenant to pay it, whether it is refundable if no lease is concluded, and whether the amount is separate from any owner-agent management fee. Please also provide the relevant invoice and VAT details.
If section 68 is relevant, add:
I am also asking how this charge is reconciled with section 68(1) of the Property Practitioners Act, which addresses the drafting of an agreement to let and hire property for the relevant party’s own account.
This type of message creates a clearer record than an accusation. It also gives the agency an opportunity to explain whether the line item is genuinely a separate service or simply a renamed lease-preparation cost.
What If You Already Paid?
Do not delete the listing, receipt or messages. Ask in writing for the charge to be explained and, if appropriate, refunded or credited. Keep the request focused on the amount and the legal or contractual basis for it.
Do not automatically stop paying rent that is clearly due under the lease. Withholding rent or making an unauthorized deduction can create a separate default dispute. If the amount is material, the agent threatens termination, or you are being pressured to sign immediately, obtain independent legal advice before taking a step that could affect your tenancy.
PPRA or Rental Housing Tribunal?
The appropriate route depends on what you want to resolve.
PPRA: practitioner conduct
If the concern is improper conduct by a property practitioner—such as a misleading fee description, failure to provide information or conduct inconsistent with regulatory duties—you can review the PPRA complaint process.
For a leasing complaint, PPRA asks for documents such as the lease agreement and proof of rent or deposit payments. The Authority also warns that it cannot order an agent to reimburse or pay damages, cancel or enforce a contract, prevent an eviction or intervene in civil proceedings. A PPRA complaint may therefore be appropriate for regulatory scrutiny, but it is not a guaranteed refund process.
Western Cape Rental Housing Tribunal: rental disputes
For a property in the Western Cape, the Rental Housing Tribunal service is a free public service for landlords and tenants and can deal with disputes connected to rental properties and leases. The complaint-form page explains that complaints are screened for possible unfair practices and should include the relevant property, agent and supporting documents.
The Tribunal route should not be presented as an automatic answer to every fee dispute. Read the current instructions, submit copies rather than originals where requested and obtain legal advice if you need a binding interpretation of a contract, recovery of money or urgent protection from eviction.
Where Pine Fits
Open Pine to organize the rental listing, fee schedule, lease, invoices, payment records and messages into a dated timeline. You can also use it to separate confirmed facts from assumptions, list the questions you still need answered and prepare a neutral written request for review.
Frequently Asked Questions
Is a lease drafting fee automatically illegal in South Africa?
No automatic conclusion should be drawn from the label alone. Section 68(1) gives tenants an important basis to challenge a charge that simply covers drafting the ordinary letting agreement, but the exact service, contract, mandate and surrounding facts still matter.
Can an agent avoid section 68 by calling the charge a contract setup fee?
Changing the label does not answer the legal question. Ask what work was actually performed, who commissioned it, whether it is part of the ordinary lease process and where the tenant agreed to pay it.
Is an application fee the same as a lease drafting fee?
Not necessarily. An application fee may be described as screening or administration before a lease is signed, while a drafting fee relates to preparing the letting agreement. The tenant should request separate descriptions, terms and invoices for each amount.
Does a tenant-paid agency fee automatically mean the landlord committed tax fraud?
No. SARS guidance on permissible rental-income deductions does not, by itself, determine who owes a fee or prove fraud. Tax and rental-contract questions must be analyzed separately.
Can I refuse to pay the fee or deduct it from rent?
Do not assume that unilateral nonpayment is safe. First dispute the charge in writing and obtain South African legal advice, especially if the lease has already been signed or the agent threatens termination.
Should I complain to the PPRA or the Rental Housing Tribunal?
PPRA is the relevant regulator for a complaint about property-practitioner conduct. The Western Cape Rental Housing Tribunal can address rental disputes involving property and leases in that province. Each body has different powers and neither should be treated as a guaranteed refund or emergency eviction remedy.
Official Sources
- Property Practitioners Act 22 of 2019 — section 68
- Property Practitioners Regulations 2022 — Code of Conduct
- Property Practitioners Regulatory Authority — mandate
- PPRA — online legal complaint process
- Western Cape Rental Housing Tribunal
- Western Cape Rental Housing Tribunal complaint forms
- South African Revenue Service — tax on rental income
This article provides general information, not legal or tax advice. Rules, remedies and forum options depend on the facts, the written documents and the province in which the property is located.
