Factors that change tenancy

THERE are very few rental properties that will be occupied 100% of the time, but the vacancy rate can vary considerabaly – and make all the difference between a good buy-to-let investment and a bad one.

That’s the word from Tobie Fourie, national rentals manager for the Chas Everitt International property group, who said most seasoned investors will make allowance for their rental property to be vacant about 5% of the time.

“However, it is also important to consult a reputable managing agent to establish the average vacancy rate for the area – and find out about factors that could affect this rate in future.”

“At around 5%, there should be steady demand and landlords in the area should be able to achieve moderate annual increases in rent, but when the vacancy rate drops below about 8%, that can become difficult.”

There are, however, several factors that can change the vacancy rate in the short or longer-term, he said.

“The most important of these is the overall availability of rental property in the area versus demand.” Secondly, said Fourie, investors should consider the position of the rental property within a particular area.

Keeping the property in good condition can also have a significant impact on the vacancy rate, he says. “Tenants don’t only move because of life changes such as a new job or a new baby. Rental homes need to be well-maintained or any proposed rental increase will swiftly prompt them to move to a newer or better-managed property.”

Fourie notes that when buying a sectional title property, investors also need to consider the state of the building or complex as a whole.

“Tenants of course prefer to rent in a well-kept scheme with good security, and that is only possible when owners are paying their levies and the body corporate has sufficient income, so investors should always ask to see the current financial records of a sectional title scheme before they buy there.”