Mind the com­plex­i­ties when in­vest­ing in hol­i­day rental prop­erty

George Herald - Private Property - - Property News -

Many prop­erty own­ers soon re­alise that short-term rentals, es­pe­cially hol­i­day rentals, are com­plex and per­haps best man­aged by a skilled rental agent. It re­quires a lot of ad­min­is­tra­tion and a hands-on ap­proach.

The rise in pop­u­lar­ity of Airbnb has seen some­what of an ex­plo­sion of peo­ple in­vest­ing in short-term rentals as prop­erty own­ers look to cap­i­talise on what is of­ten seen as lu­cra­tive rental in­come. While the in­come can be at­trac­tive, there are many com­plex­i­ties and pit­falls, says Natalie Muller, sales and rentals man­ager for Se­eff At­lantic Se­aboard and City Bowl. Ac­cord­ing to an Airbnb re­port re­leased in Oc­to­ber last year, 43 000 homes in South Africa are listed on the site (about 17 000 in Cape Town) and the typ­i­cal host earns R28 000 per an­num based on 19 nights a year.

Muller says prop­erty own­ers need to first see to it that they are legally com­pli­ant and then, to re­ally en­sure they can meet their in­come tar­gets, at­tract good cal­i­bre guests with a top qual­ity prod­uct. She puts this into per­spec­tive by us­ing Cape Town as a case study.

Cape Town is the busiest tourist city on the African con­ti­nent and reg­u­larly fea­tures as a top des­ti­na­tion, the lat­est ex­am­ple be­ing its nom­i­na­tion as one of the world's most beau­ti­ful cities by CNN Travel. The tourist sea­son runs from around Oc­to­ber to April an­nu­ally and the city at­tracts peo­ple from across the coun­try, along with a lot of for­eign­ers who of­ten spend long pe­ri­ods in the city to es­cape the cold Euro­pean win­ter.

Leg­isla­tive land­scape

Town and city coun­cils have by-laws which reg­u­late the use of the prop­erty. In the case of Cape Town, there is a com­pre­hen­sive

"Guest Ac­com­mo­da­tion Pol­icy" drawn up pre-2010 for the Soc­cer World Cup, which reg­u­lates the zon­ing and re­quire­ments. Guest ac­com­mo­da­tion is also reg­u­lated in terms of the Mu­nic­i­pal Plan­ning by-law of 2015. You can gen­er­ally op­er­ate a B&B from a full ti­tle house with­out prior con­sent, but sub­ject to cer­tain con­di­tions (like not rent­ing out more than three rooms), but it is more com­plex when it comes to sec­tional schemes.

Sec­tional ti­tle schemes

Sec­tional schemes are more chal­leng­ing, and would only be per­mit­ted if zoned GR2GR6, which most of Cape Town prop­er­ties are. If not, per­mis­sion is re­quired from the city's De­vel­op­ment Man­age­ment depart­ment. The Sec­tional Ti­tles Act and the Sec­tional

Ti­tles Schemes Man­age­ment Act (STSMA) also em­power a body cor­po­rate to make or amend ap­pro­pri­ate rules and hol­i­day rentals could, there­fore, be blocked if prob­lem­atic.

The body cor­po­rate must also be in­formed of names and ID num­bers of all oc­cu­pants, and ten­ants must be in­formed of rules in­clud­ing se­cu­rity ar­range­ments and noise (which can be prob­lem­atic with short-lets).

Agree­ment and gov­er­nance

Ja­nine van Heer­den, rentals man­ager at Se­eff Hout Bay and Llan­dudno, says that it is im­por­tant to have a de­tailed short-term lease

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.