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Rent-pro­tec­tion in­sur­ance

Oobain­sure, the in­sur­ance arm of bond orig­i­na­tor ooba, re­cently launched Rent Pro­tec­tor, a new fi­nan­cial prod­uct aimed at ten­ants, land­lords and agents.

Ac­cord­ing to ooba, Rent Pro­tec­tor will set the new stan­dard for the way in which rentals are pro­cessed and set up.

“Oobain­sure’s abil­ity to in­sure land­lords against missed rental pay­ments means they don’t have to de­mand a de­posit to cover against po­ten­tial losses,” says Alex Bar­tels, na­tional sales man­ager for oobain­sure.

“The zero-de­posit op­tion for ten­ants who do not al­ways have the abil­ity to pay one or two months’ rent up­front to se­cure a lease also re­sults in re­duced fi­nan­cial risk for all par­ties in­volved.”

The prod­uct is fully com­pli­ant with the Con­sumer Pro­tec­tion Act and is avail­able to all ten­ants who pass the vet­ting process and sign a min­i­mum 12-month lease.

Bar­tels says agents will ben­e­fit from Rent Pro­tec­tor be­cause of ooba’s ex­ten­sive and com­pre­hen­sive vet­ting sys­tem for all prospec­tive ten­ants.

Agents will no longer be re­quired to man­age trust ac­counts or han­dle the oner­ous evic­tion process be­cause th­ese pro­cesses will be han­dled by Rent Pro­tec­tor at no cost to the agent. In ad­di­tion, the agent’s rental com­mis­sion is guar­an­teed dur­ing a claim for up to three months.

If you are a land­lord, Rent Pro­tec­tor of­fers cover for up to three months’ rental should a ten­ant ab­scond or re­main in un­law­ful oc­cu­pa­tion and up to R50 000 in le­gal fees as­so­ci­ated with evic­tion, with Rent Pro­tec­tor man­ag­ing the process on your be­half.

Ex­tra cover in­cludes un­paid util­ity ac­counts and dam­ages that oc­cur dur­ing ten­ancy.

Agents and land­lords sim­ply need to reg­is­ter on­line and up­load their rental prop­erty de­tails on to the ooba web­site (ooba.co.za) to ap­ply for Rent Pro­tec­tor.

The Rent Pro­tec­tor pol­icy of­fers full cover from day one of the lease.

Prop­erty mar­ket news

Prop­erty sta­tis­tics from bond orig­i­na­tor ooba show that house prices have con­tin­ued to grow in ex­cess of in­fla­tion, but ap­proval rates of prospec­tive buy­ers have dropped.

Rhys Dyer, CEO of ooba, says slower eco­nomic growth and ex­change rate de­pre­ci­a­tion, which will drive in­fla­tion, and, con­se­quently, in­ter­est rate in­creases, as well as the in­crease in the cost of liv­ing are all likely to re­sult in a slow­down in de­mand for res­i­den­tial prop­erty this year.

This ex­pected slow­down in de­mand, cou­pled with some im­prove­ment in prop­erty sup­ply lev­els, will be­gin to af­fect prop­erty price growth. How­ever, ooba does not fore­see sig­nif­i­cant re­duc­tions in prop­erty price growth this year. Prop­erty prices have been grow­ing at be­tween 6% and 7%. Dyer ex­pects this growth rate to slow slightly dur­ing the year ahead to be­tween 5% and 6%.

“On the home loan front, we ex­pect in­ten­si­fied af­ford­abil­ity pres­sure on home buy­ers, which will likely in­crease home loan de­cline rates across banks,” adds Dyer.

Dyer ex­pects that the mix of home loan ap­pli­cants will change in 2016. He ex­pects a lower per­cent­age of first-time home buy­ers as they de­lay their de­ci­sion to en­ter the mar­ket un­til the eco­nomic en­vi­ron­ment im­proves.

“We ex­pect that more buy­ers will pur­chase within their af­ford­abil­ity con­straints and at lower lev­els, and that banks will drive buy­ers to put down larger de­posits. Banks will be watch­ing the con­sumer af­ford­abil­ity po­si­tion very care­fully and will tai­lor their lend­ing ap­proaches, both in terms of the home buyer and the prop­erty it­self, to con­tain risk,” he ex­plains.

Time to fix mort­gage rates

At the end of this month, the SA Re­serve Bank will have a Mon­e­tary Pol­icy Com­mit­tee meet­ing and is widely ex­pected to raise in­ter­est rates by 25 ba­sis points to 6.5%, which will af­fect home­own­ers who are pay­ing mort­gages, as well as prospec­tive buy­ers.

John Loos, house­hold prop­erty strate­gist at FNB Home Loans, says this might be a good time to con­sider fix­ing the in­ter­est rate on your home loan. The ben­e­fit of fix­ing your rate is that you have cer­tainty when it comes to your home loan re­pay­ments in an en­vi­ron­ment of ris­ing in­ter­est rates. The down­side is that if, for ex­am­ple, you agree to a fixed in­ter­est rate of 6% and the in­ter­est rate falls to 5%, you will be tied in to the higher rate.

Loos ad­vises that if you are en­ter­ing the prop­erty mar­ket now, you should cal­cu­late your af­ford­abil­ity based on an in­ter­est rate of 15%, which means you will have a monthly buf­fer in your bud­get to ac­com­mo­date in­ter­est rate hikes.

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