Does A Residential Lease Of A Family Home Fall Within The Ambit Of The Consumer Protection Act?

In the recent judgment in Els v Venter and Another, the Supreme Court of Appeal ("SCA") had to decide whether a residential lease agreement of a family home falls within the ambit of the Consumer Protection Act 68 of 2008 (CPA), specifically whether the lease agreement constituted an agreement for "consideration" "in the ordinary course of business" as contemplated by the CPA, and the appropriateness of a High Court order compelling vacation of a property without following the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 ("PIE").

Mr and Mrs Venter, the registered owners of a property in Stellenbosch who intended to relocate to Australia, concluded two three year lease agreements with the tenant, Mr Els. The first lease agreement ran from 1 January 2021 to 31 December 2023 and the second lease agreement was to run from 1 January 2024 to 31 December 2026. The dispute between the parties is centred around the second lease agreement for two reasons: (i) the registered owners of the property decided to sell the property during the subsistence of the second lease agreement; and (ii) the second lease agreement contained a clause allowing the registered owners to terminate the second lease agreement on three months' written notice.

During 2023, the owners decided to sell the property and informed the tenant of their intention to do so given that they had decided to settle in Australia. They informed the tenant that the second lease agreement would be subject to a three month notice period in respect of any termination by them. The registered owners sold the property on 19 December 2023 and issued such a notice to the tenant on 21 December 2023. The tenant initially accepted the notice but later contended that the termination was unlawful and invalid because the CPA governed the second lease agreement as a fixed-term consumer agreement, and termination, absent a material breach, was not permitted.

The registered owners instituted an urgent application in the High Court of South Africa ("the High Court") seeking inter alia: (i) a declaratory order that the second lease agreement was valid; (ii) that the CPA did not apply to the second lease agreement; (iii) that the termination notice had been given properly; and (iv) that the tenant should vacate the property. The High Court found that the CPA did not apply and declared the termination valid. It also directed that the property be vacated by a set date. Consequently, the tenant was ordered to pay the costs of the urgent application on an attorney and own client scale. On appeal, the SCA agreed that the CPA did not apply and the notice of termination was valid, but set aside the eviction order as an impermissible eviction order outside the PIE framework.

Applicability of the Consumer Protection Act to Residential Leases

The Court's analysis turned on the statutory definition of "transaction" and "rental", both of which are based on the supplier acting "in the ordinary course of business" and the continual marketing of services. The CPA provides that, for a lease agreement to be a "rental" under the Act, the lessor must be carrying on a business of letting property, engaged in the continual marketing and supply of such services to consumers. It is not sufficient that a lease agreement exists for consideration. The lease agreement must be embedded in ordinary, routine business operations and not once off transactions for it to fall within the purview of the CPA.

Applying this objective test to the facts, the Court found that the owners were private individuals who temporarily let their family home as a stopgap while relocating and preparing for sale, and were not professional lessors offering rental stock to the market. They were not "suppliers" marketing services in the ordinary course of business, and the tenant was not a "consumer" in the CPA sense. The second lease agreement, therefore, fell outside the statutory scheme of the CPA and constituted an agreement concluded between private individuals to protect an asset pending its sale. This construction is reinforced by the purposes of the CPA, which aims to protect the rights of historically disadvantaged persons who are easily exploited (vulnerable consumers) and regulate commercial market practices, rather than private, once-off arrangements between parties of equal bargaining power.

Fixed-Term agreements and Section 14 of the CPA

The tenant's reliance on section 14(2)(b)(ii), which regulates cancellation of fixed-term consumer agreements, failed for two independent reasons. First, the agreement was not a "consumer agreement" within the CPA. Second, even if the CPA applied, the lease's 36-month tenure exceeded the 24-month default cap in the regulations, without proof of a demonstrable financial benefit to the consumer. The statutory fixed-term regime could not be invoked to invalidate a termination right expressly agreed by the parties.

The "Ordinary Course of Business" standard

The decision clarifies that the "ordinary course of business" test is objective and fact-sensitive, concerned not with whether the transaction is ordinary in a lay sense, but whether it forms part of the lessor's normal, day-to-day business operations. The Court drew on established definitions to emphasise routine and continual marketing activity as the hallmark of business. Singular or protective arrangements by private owners managing a personal asset, while in transition, do not meet this threshold.

Interaction with PIE: Limits on Eviction Relief

While affirming the validity of the contractual termination, the Court set aside the order directing the tenant to vacate by a fixed date. Such an order, in effect, amounted to an eviction without compliance with the procedural and substantive safeguards of PIE. PIE requires a just and equitable determination by the court seized with the eviction, including a consideration of all of the relevant circumstances and the setting of appropriate dates for vacation and execution.

Conclusion

The judgment draws a principled boundary around the CPA's reach, confirming that it regulates commercial leasing activity by suppliers in the business of marketing rental services, not private, once-off leases of a family home concluded as an interim step pending sale. Parties cannot invoke the CPA's fixed-term protections to displace agreed termination mechanisms, where the CPA does not apply. At the same time, even a valid contractual termination does not license eviction of a residential home outside the provisions of PIE. The result is a coherent, two-track framework: contractual freedom governs private residential leases outside the CPA, but any displacement from occupation remains subject to PIE's just and equitable process. This preserves both certainty in private contracting and the constitutional safeguards governing evictions.

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