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In South Africa’s highly competitive rental market properties are in high demand and short supply. With economic uncertainty and the rising cost of living placing pressure on consumers, many have put their homeownership aspirations on the backburner and are opting to remain in the rental market for the meanwhile.
Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, says the competition for rental property coupled with changes in legislation has led to landlords and rental agents scrutinising each potential tenant, which has also made it harder for tenants to find a rental property.
“The Prevention of Illegal Eviction and Unlawful Occupation of Land Act 19 of 1998 (PIE) and the Consumer Protection Act 68 of 2008 (CPA) have made it more difficult to evict tenants, even those who default on the rental payment,” says Goslett.
The estate agency 'disruption' is here: How to survive
The estate agency profession is facing disruption, and for agents to survive, they need to evolve. Many factors are contributing to this disruption, which is already underway.
One of the looming threats to traditional estate agencies is the rise of the online property portals, which don’t just showcase properties, but have a back-end support team that now supports the entire sales process at significantly lower commissions than traditional estate agencies earn.
Another is that the property profession is under pressure to transform; the average age of South Africa’s agents is around 58 years and agent demographics do not reflect the transformation goals of our country. However, many of us are averse to change and are not ready to embrace technology and diversity with all the challenges and opportunities they bring.
Pre-owned vs new property: get up to 44% more space
Buying a newly-built home has many attractions, but for most first-time home buyers, saving tax is no longer one of them.
For many years, one of the biggest incentives to buy off-plan or into newly-completed developments has been the fact that the ‘price you see is the price you pay’, with VAT being built into the sale price and buyers thus not being required to find additional cash to cover transfer duty.
“However, with the transfer duty threshold currently at R900 000, that is simply no longer true for many first-time buyers, who are currently paying an average purchase price of around R750 000 to R800 000. The truth is there is now no tax at all payable on pre-owned properties costing less than R900 000, but still 14% payable on newly-built homes in this price bracket,” says Berry Everitt, CEO of the Chas Everitt International property group.
Community engagement essential for shaping SA cities
Each urban development affects not only those that invest in it or occupy the buildings and places within it, but the wider community - all those that live and work nearby, simply pass through or visit the area on a regular basis.
“How and where we build new or regenerate existing buildings and places, and what uses we plan for them affects our quality of life - our feeling of belonging, identity and pride, safety, crime and fear of crime, community cohesion, health, access to essential facilities including schools, public transport, green spaces or shops, as well as economic prosperity of local businesses or entire city regions,” says Biljana Savic, a London town planner and Director of The Academy of Urbanism.
“Therefore, it is only right that all the affected parties, including local residents and businesses, should be actively involved in shaping the developments that affect them.”
How Cape Town’s water restrictions affect tenants and landlords
With the City of Cape Town implementing Level 4B water restrictions as of 1 July 2017, which has very stringent water usage requirements, landlords that are renting out units with gardens might have to reassess what the tenant is responsible for when it comes to looking after the property.
This is according to Michael Bauer, managing director of estate agency SAProperty.com, who says the new level of water restriction bans the use of any municipal drinking water to top up swimming pools, water the garden and any other non-essential purposes, and the City is encouraging people to use only 87 litres per person per day.
“The problem with dealing with these water restrictions is that most leases would say that the tenant is responsible for the maintenance and upkeep of any swimming pool or garden, which he or she now cannot reasonably do,” says Bauer.
Community engagement essential for shaping SA cities
In the wake of the country entering its second recession since 2009, consumer confidence continues to plummet - allowing those in the financial position to purchase property to place dramatic downward pressure on property prices.
The June FNB House Price Index reflected a -2.0% year-on-year rate of house price growth in May, after a revised -2.1% in April when adjusting for Consumer Price Index (CPI) inflation.
According to Roy Lazarus of Park Village Auctions (PVA), this means sellers are often faced with the decision to either stay put or accept offers that are lower than their intended selling price - perhaps even at a potential loss - if the sale comes down to negotiations with a buyer.
Lazarus says people looking to sell in a ‘buyer's market’ turn to auctions mainly because of the swift nature of the transaction - haggling is eliminated and assets are realised almost immediately. This brings the entire sales process to finality much quicker, without any suspensive conditions.