The low-do­wn on let­ting pro­per­ty

George Herald - Southern Cape Property Guide & Auto Dealer - - News -

Ir­re­specti­ve of w­het­her the pro­per­ty in que­s­ti­on is a on­e­be­droom stu­dio flat, a cot­ta­ge at the back of the gar­den or an en­ti­re e­sta­te, the sa­me laws and pro­ce­du­res ap­ply and need to be un­der­stood cle­ar­ly in or­der to ma­ke a success on the ren­tal mar­ket. T­his is ac­cor­ding to A­dri­an Gos­lett, re­gi­o­nal di­rec­tor and CEO of RE/MAX of Sout­hern A­fri­ca, who says that o­w­ning and let­ting out a ren­tal pro­per­ty can of­ten be an in­vol­ved pro­cess.

From se­cu­ri­ty de­po­sits and cre­dit checks to a ran­ge of va­ri­ous in­su­ran­ce po­li­cies to con­si­der, Gos­lett ex­plains the im­por­tan­ce of each and how the­se mo­re com­plex as­pects of the ren­tal in­du­stry are cru­ci­al for both land­lords and te­nants to un­der­stand.

Un­der­stan­ding se­cu­ri­ty de­po­sits

It is ge­ne­ral practi­ce in to­day's ren­tal mar­ket for land­lords to re­quest a de­po­sit from their te­nants be­fo­re t­hey mo­ve in­to a pro­per­ty. Un­der­stan­ding w­hat the­se se­cu­ri­ty de­po­sits are ac­tu­al­ly me­ant for and the laws that pre­si­de o­ver them is vi­tal for both land­lords and te­nants. Ac­cor­ding to the Ren­tal Hou­sing Act (RHA), which go­verns re­si­den­ti­al te­nant­land­lord re­la­ti­ons­hips, the se­cu­ri­ty de­po­sit is held by the land­lord (or a­gent) until ter­mi­na­ti­on of the ren­tal agreement and fi­nal in­specti­ons of the pro­per­ty are ma­de. Gos­lett says w­hen a te­nant pays the de­po­sit, the land­lord is re­qui­red by the Ren­tal Hou­sing Act to pla­ce the mo­ney in an in­te­rest-be­a­ring ac­count, held with a fi­nan­ci­al in­sti­tu­ti­on. Un­der the Act, fi­nal in­specti­ons ha­ve to be ma­de joint­ly by the land­lord (or a­gent) and the te­nant, both at the com­men­ce­ment of the le­a­se agreement - be­fo­re the te­nant ta­kes occu­pa­ti­on - as well as at the end, at le­ast three days be­fo­re the le­a­se is due to ex­pi­re.

"E­ven though the de­po­sit is paid to the land­lord, it re­mains the te­nant's mo­ney. The land­lord is me­re­ly hol­ding the mo­ney as a se­cu­ri­ty me­a­su­re, should the te­nant de­fault or bre­ach the ren­tal agreement. If the te­nan­cy runs its nor­mal cour­se, the de­po­sit al­ong with all in­te­rest e­ar­ned must be paid o­ver to the te­nant at the end of the le­a­se agreement pe­ri­od," says Gos­lett. Cre­dit checks - se­lecting the rig­ht te­nants

Te­nant se­lecti­on will ha­ve a mas­si­ve im­pact on the fi­nan­ci­al success of the pro­per­ty ren­tal. For t­his re­a­son, each te­nant should be ca­re­ful­ly vet­ted be­fo­re t­hey rent out the pro­per­ty. The land­lord should en­qui­re a­bout de­tails

of the te­nant's pre­vi­ous ren­tal his­to­ry, re­a­sons t­hey are mo­ving, their pla­ce of em­ploy­ment and in­co­me. Land­lords should con­tact the gi­ven re­fe­ren­ces in or­der to ve­ri­fy as much of the in­for­ma­ti­on as pos­si­ble.

"The te­nant se­lecti­on pro­cess is w­he­re the ser­vi­ces of a ren­tal a­gent will co­me in han­dy, as t­hey will be a­ble to pro­fes­si­o­nal­ly vet all pos­si­ble te­nants. Whi­le it is not le­gal to dis­cri­mi­na­te a­gainst any te­nant, it is al­so not wi­se to sim­ply accept te­nants on a first-co­me-first-ser­ve ba­sis," ad­vi­ses Gos­lett. In­su­ran­ce

Pro­per­ty is one of the lar­ge­st and most cos­t­ly in­ves­t­ments a­vai­la­ble and alt­hough un­doub­ted­ly a sound in­ves­t­ment, the­re are ci­r­cum­stan­ces that can cost the o­w­ner de­ar­ly. The­re­fo­re, ta­king out va­ri­ous in­su­ran­ce po­li­cies is a must, as the re­a­li­ty is that un­for­tu­na­te e­vents hap­pen and you need to be pre­pa­red for them - es­pe­ci­al­ly in the ca­se w­he­re you are the land­lord. Gos­lett ex­plains the va­ri­ous in­su­ran­ce po­li­cies to con­si­der:

Buil­ding in­su­ran­ce - co­vers the phy­si­cal struc­tu­re of your ho­me and its as­so­ci­a­ted out­buil­dings. T­his in­su­ran­ce ty­pi­cal­ly pro­tects you from any da­ma­ge that may occur to the pro­per­ty as a re­sult of na­tu­ral di­sas­ters such as f­looding, fi­res, thun­der­storms (hail and/or lig­ht­ning da­ma­ge), or per­haps a tree that has fal­len and da­ma­ged the pro­per­ty. So­me in­su­rers in­clu­de a burst ge­y­ser as part of buil­ding in­su­ran­ce but, as al­ways, ma­ke su­re you re­ad the fi­ne print and know ex­act­ly w­hat your po­li­cy co­vers.

In­dem­ni­ty in­su­ran­ce - ai­med at pro­vi­ding pro­tecti­on a­gainst fi­nan­ci­al loss re­sulting from a le­gal li­a­bi­li­ty to

a thi­rd par­ty. In ot­her words, t­his kind of in­su­ran­ce will pro­tect you from any da­ma­ges or de­at­hs that mig­ht accrue to a te­nant or a vi­si­tor of your te­nants. For ex­am­ple, w­hat if the­re was a fi­re? Your buil­ding in­su­ran­ce would co­ver any da­ma­ge to the pro­per­ty, but w­hat would hap­pen if your te­nant was in­ju­red du­ring the fi­re? Who would pro­tect you from your te­nant? Non-pay­ment of rent - t­his sa­fe­guards you a­gainst de­faul­ting te­nants and de­cre­a­ses your risk by en­su­ring that you al­ways re­cei­ve an in­co­me from your pro­per­ty. Da­ma­ges to the pro­per­ty by the

te­nants - a­gain, t­his de­cre­a­ses the risk fac­tor by re­mo­ving the e­le­ment of chan­ce and ma­king su­re you, as the land­lord, are co­ve­r­ed and pro­tected.

An­nu­al in­cre­a­ses in the in­su­ran­ce pre­mi­um can al­so be re­co­ve­r­ed from the te­nant (on­ce the fixed pe­ri­od has pas­sed) in South A­fri­ca. The land­lord, ho­we­ver, is not al­lo­wed to char­ge the te­nant for the i­ni­ti­al in­su­ran­ce, on­ly the in­cre­a­se, es­pe­ci­al­ly if cau­sed by the te­nants them­sel­ves. Just ma­ke su­re that your in­su­ran­ce com­pa­ny is ma­de a­wa­re of any c­han­ges - the mo­re t­hey know the bet­ter. To a­void com­pli­ca­ti­ons or mis-un­der­stan­dings, it is be­st for all sti­pu­la­ti­ons to be cle­ar­ly sta­ted up front in a de­tailed con­tract. Ac­cor­ding to Gos­lett, if all the im­por­tant e­le­ments are in­clu­ded in the do­cu­ment, the­re will be no a­re­as that are left o­pen for in­ter­pre­ta­ti­on.

He con­clu­des that, whi­le o­w­ning a ren­tal pro­per­ty and be­co­ming a land­lord can be hard work, it is al­so an op­por­tu­ni­ty for the land­lord to cre­a­te we­alth o­ver the long term. Gos­lett no­tes that the key e­le­ment to success is to al­ways view pro­per­ty in­ves­t­ment with the fu­tu­re in mind.

Newspapers in Afrikaans

Newspapers from South Africa

© PressReader. All rights reserved.