SA property market swinging to favour buyers
The residential market up until 2015 was essentially a sellers’ market driven by low interest rates, strong demand from buyers and a shortage of stock.
Despite a slow economy, Herschel Jawitz, CEO of Jawitz Properties, says this market imbalance meant double-digit price growth, especially in the major metros such as Johannesburg and Cape Town.
“The market in 2016 has started to shift to reflect the state of the economy, the current rising interest rate cycle and the relatively low levels of consumer and business confidence,” says Jawitz.
“With fewer and more cautious buyers in the market this year, relative to the number of sellers, the competition is not only between buyers, but also between sellers competing for fewer buyers.”
Tenant no-payment an increasing problem for agents
In light of the current economic situation in South Africa, agents are struggling more and more with tenants that pay late, or not at all. The most recent PayProp Residential Rental Index reported that the average South African tenant spends roughly a third of his pre-tax earnings on servicing debt, while still juggling up to eight store accounts and three credit facilities.
“What is more concerning is that the average tenant is using approximately 69% of the credit available to them, resulting in limited means to absorb any further financial shocks that might occur,” says Liebenberg.
The reality is that estate agents are requiring increasing assistance to secure regular monthly rental payments.
IT3b certificates should not delay audit report submission
Some property companies are in the process of submitting documentation to their auditors, to be sent on to the Estate Agency Affairs Board (EAAB) for their yearly audits, but there have been instances where there has been difficulty in acquiring the IT3b certificate that is part of what is required by the EAAB.
There is, however, an alternative, says Annette Evans, general manager of the Institute of Estate Agents of South Africa’s (IEASA) Western Cape branch, and that is to include a covering letter (in place of the IT3b certificate) explaining the reasons why the IT3b certificate could not be obtained and attached when submitting the audit report online.
The EAAB have said that delays or difficulties in obtaining the IT3b certificates from banks should not delay the submission of audit reports within the prescribed four months after the financial year end.
Tenants and landlords: How to handle renting with pets
One of the more delicate and contentious issues in leases in South Africa is the debate surrounding pets in a rental property and the restriction of keeping pets within a lease and how reasonable this is.
The debate is a sensitive one because many consider their pets as they would any other family member, and being restricted from keeping pets gets people rather heated and flustered.
“As a Residential Rental Specialist, I deal with the matter almost monthly,” says Grant Rea at Remax Living. “Many landlords simply disallow pets entirely, eliminating a large percentage of people from their potential pool of tenants. This is a particular issue in Cape Town where many people are ardent pet owners.”
The 'true' cost of buying property
Buying property need not be overly complicated or stressful, but it’s not as simple as saving for a deposit and choosing your dream house.
The ‘dream’ can quickly become a nightmare when faced with all the additional costs that come with buying property, so it’s essential to factor these into your budget, says Kay Geldenhuys from mortgage originator, ooba.
“As a rule of thumb, you should allow for between 8% and 10% of the purchase price of the property for the additional costs over and above the deposit,” she says.
Geldenhuys cautions prospective buyers and investors to do their homework thoroughly - to be aware of costs and procedures before even starting to look for a home. “This determines in which price range you can afford to buy,” she says.
Rental scams are on the rise
As consumer budgets come under increasing strain, the demand for affordable rental accommodation is rising - and making it easier for bogus agents and landlords to defraud potential tenants.
Julie Ruwers, residential property manager for Trafalgar in Durban, says there are a few different scams used by these crooks, but one of the most common at the moment is to impersonate a legitimate agent in order to get their hands on the deposit and first month’s rent before disappearing.
Ruwers says the scam usually begins with the bogus agent “lifting” the details of a property that is to rent off a letting agency’s website or a property portal, then advertising the property elsewhere at a lower or “special” rental.