Growth in rental mar­ket en­sures record year for in­dus­try

Weekend Argus (Saturday Edition) - - PROPERTY -

A CON­STANTLY g row­ing de­mand for rentals in all ar­eas of the Penin­sula has led to a record year for the in­dus­try, ac­cord­ing to Gre­eff rentals prin­ci­pal Glenda Tay­lor.

“The de­mand is par­tic­u­larly high in the R8 000 to R15 000 a month bracket, and that’s where there is a huge short­age in sup­ply,” says Tay­lor, whose di­vi­sion is also man­ag­ing a sig­nif­i­cant num­ber of homes that are be­ing let for be­tween R45 000 and R65 000 a month.

“Th­ese are mostly large lux­ury homes in ar­eas like Con­stan­tia, with four to five bed­rooms, am­ple en­ter­tain­ment space, staff quar­ters, swim­ming pools and ex­pan­sive grounds. There has a been a shift in clien­tele from cor­po­rate to pri­vate. Cor­po­rate bud­gets are not as gen­er­ous as they have been in the past, and a num­ber of th­ese rentals are be­ing funded by pri­vate in­di­vid­u­als.”

She says prop­er­ties in all price brack­ets are likely to yield rental re­turns. How­ever, if want to build up your prop­erty port­fo­lio, you should con­sider buy­ing 10 prop­er­ties priced at R1 mil­lion each r at her t han one prop­erty priced at R10 mil­lion.

The ra­tio­nale is that if you lose one ten­ant you lose all your in­come, but if you lose one or two of your 10 ten­ants, you’re still rel­a­tively safe. How­ever, the risk of los­ing rental in­come can be rad­i­cally re­duced if strict cri­te­ria for cred­it­wor­thi­ness are ad­hered to when screen­ing ten­ants in the first in­stance.

“Gre­eff Rentals in­vests in the ser­vices of rep­utable credit bu­reaus and we metic­u­lously check credit records, rental his­to­ries and ev­i­dence of in­come such as bank state­ments.

“The tough mea­sures pay off and rental man­age­ment fees are a drop in the ocean when com­pared to the crip­pling le­gal fees as­so­ci­ated with evic­tion of non- pay­ing ten­ants,” says Tay­lor.

When cal­cu­lat­ing an­nual rental re­turns, Tay­lor ad­vises look­ing at a to­tal of 10 months’ rental.

“One month in the year cov­ers rental man­age­ment fees and the sec­ond cov­ers main­te­nance, both of which are tax de­ductible. How­ever, it’s a mis­take for land­lords to as­sume that ten­ants’ de­posits are part of the rental re­turns, to al­lo­cate as they please. Ten­ants’ de­posits must be kept in trust and only used in the event of dam­ages for which the ten­ant can be shown to be li­able. Gen­eral main­te­nance and fair wear and tear re­pairs are the re­spon­si­bil­ity of the land­lord. The de­posit monies can only be dis­persed on ter­mi­na­tion of the lease,” says Tay­lor.

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