Over 2m households rent their homes

DESPITE the economic stress being felt across the property sector, there are still pockets of excellence in the rental market.

So says Michelle Dickens, managing director of TPN, a property specialist credit bureau. Her research reveals “astoundingly high performance” in some areas.

“There are 2.1 million households in formal rental accommodation in South Africa.

“Of the 1.4 million lease agreements that TPN profiles, 22% pay below R3 000 a month, 59% are in the R3 000 to R7 000 rental bracket and 14% are in the R7 000 to R12 000 bracket.

“Only half a percent are paying above R25 000 a month.”

This means almost 80% of tenants across the country are paying below R7 000 a month, Dickens says.

“Besides these broad figures, it is critical to determine which suburbs perform best in terms of average yield when planning your property investment strategy. And here the results are surprising.”

Nine of the top 20 suburbs offering the highest yield for sectional title schemes are in Pretoria. The top performing suburb, Philip Nel Park in the west of Pretoria, averaged a yield of 20.1% over the past five years.

“With 92.3% of tenants in good standing on their rental payments, that is a pretty impressive return on investment.”

For full title properties, she says the highest yield in the country is to be found in Cosmos City in Johannesburg which has a good- standing rental payment percentage of 91.2%.

Deon Botha, chief executive at RentMaster, which specialises in guaranteeing rentals, says: “While there is no doubt that we are still seeing the results of the 2008/9 banking crisis adversely affecting the property sector, there is more good news than just the Western Cape bubble for those who look.”

Residential property is a critical socio-economic driver and there will always be demand for housing. And with so many living in informal settlements, but starting to enjoy the benefits of economic empowerment, there will be increasing demand for housing closer to workplaces.

“Property as an investment has always had a broad appeal, especially to the less sophisticated investor distrustful of the intangible nature of other options.

“The risks of bad tenant behaviour are easily mitigated. Proper screening, professional collections and sound overall management practices are required. Make sure you work with professional service providers and stay on top of things at all times,” Botha says.

Most families across the country are paying below R7 000 a month in rent.