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Eastern Cape Development Corporation begins eviction process to recover R40m in unpaid rentals from 45 Butterworth tenants

Posted On Thursday, 14 November 2019 21:55 Published by
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The Eastern Cape Development Corporation (ECDC) has begun an eviction process of 45 tenants through an order of the court at its Butterworth residential and industrial properties.


These 45 tenants owe the ECDC a combined R40 million in arrear rentals. The group of 45 forms part of 173 tenants who have been handed over to ECDC attorneys to undergo the eviction process. Already four tenants have been evicted by ECDC at its Butterworth properties for longstanding arrear rentals this year. These are tenants whose rental has been outstanding for more than three months (90 days).

ECDC is owed a total of R150,4 million by tenants at its residential and industrial properties in Butterworth. Out of this amount, R142,4 million is made up of the 173 debtors who have refused to settle their rental or ignored pleas to pay their outstanding bills. Some clients are also sub-letting ECDC properties and collecting rentals while not paying their dues to the Corporation. The vast majority of these tenants are economically active and can afford ECDC rentals. ECDC has a property portfolio of 212 flat units, 99 standalone houses and 175 industrial properties in Butterworth.

“The continued non-payment of rentals at ECDC properties is a significant cash drag on the institution. The Public Finance Management Act (PFMA) requires ECDC to exhaust all available avenues in the collection of money’s owed to a state-owned enterprise. The non-payment of rental on ECDC properties impedes ECDC’s ability to deliver on its development mandate. Government requires ECDC to be financially sound and to do more with less in a challenging fiscal environment.

“Between April and September 2019, ECDC total property expenses exceed total rental income by R12 million in its entire portfolio due to non-payment of rent. This means ECDC cannot maintain and refurbish these properties in the absence of rental income from its defaulting tenants. The rental income is not enough to cover property expenses such as rates and taxes, structural refurbishments, salaries, security as well as water and electricity. Even though tenants are not paying, ECDC is still required to pay for rates and taxes,” says ECDC chief executive officer Ndzondelelo Dlulane.

Dlulane says in order for ECDC to survive, measures are being put in place to recover debt due the Corporation.

He says tenants targeted for eviction are those that have ignored numerous reminders for payment such as telephone reminders and letters of demand before the end of the 90 day period.

“ECDC hands over tenants who are in arrears for more than 90 days. The Corporation does not just evict. After the first month of rental is unpaid, a telephone reminder is issued to the tenant. This is followed by a first and second letter of demand before the legal process commences.

“In granting an eviction order to ECDC, the court also takes into account the status and circumstances of the tenant. After an eviction order is granted, the tenant has 30 days to vacate the premises,” says Dlulane.

Last modified on Sunday, 17 November 2019 05:18
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