COMPILED BY NEESA MOODLEY
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.