Hope for SA landlords as rental market reaches equilibrium
After 18 months of minimal growth, South African landlords may not be feeling particularly optimistic about their rental investments at present. However, the latest PayProp Rental Index (Q2 2019) shows trends may finally have ceased their downward trajectory.
According to Jacqui Savage, National Rentals Manager for the Rawson Property Group, this is good news for landlords, but not necessarily a sign of a market turnaround quite yet.
“Rental growth over the last six months has been virtually flat. With Q1’s 3.85% increasing to 3.86% in Q2 this year. That might not seem particularly positive for landlords, but when taken in context with moving average trend lines dating back to 2017, it shows the first reliable sign of an end to the national rentals growth decrease,” says Savage.
Can landlords pass cost increases on to their tenants?
What happens when the municipality revalues your property and the escalation means a dramatic increase in rates? Or when your insurance on your thatched investment property in Cape St Francis goes through the roof? Or when the levies on your sectional title property are increased? Can landlords insist that their tenants help fund the difference by imposing a rental increase during the term of a lease?
“No,” says Shaun Dubois, principal of Just Property, Pietermaritzburg. “A landlord may not increase the rent in any way during the lease period, unless provision for this was agreed to and included in the lease before it was signed.”
Dubois explains that while it is much more common in commercial leases, some residential leases contain clauses that allow landlords to pass any increase in their costs related to the property to the tenant.
There are any number of variables that may increase a landlord’s costs over the term of a lease. As the months go by, the Reserve Bank’s repo rate will rise and fall, affecting the prime lending rate, and possibly what the landlord is paying on their home loan, but Dubois has never come across an interest rate increase being passed onto a tenant.
Success in the property market requires a mix of old and new
It is said that the one constant in life is change, and that no aspect of the world is immune to the effects of change. The same can be said of the property market and how it has had to adapt to current economic and market trends.
Mike Greeff, CEO of Greeff Christie’s International Real Estate, says the real estate sector is no stranger to change. “The property market is affected by change, and more importantly, changes to systems happen on a regular basis. Real estate agents have proven their tenacity by their willingness and ability to adapt to these new systems. Make no mistake though, despite the new approaches to property sales, the need for traditional real estate practices and systems remains great. Not everyone interested in buying or selling property is comfortable with navigating the process through the click of a button. There is a large percentage of people who still rely on traditionally known methods to ensure they successfully follow through on their property goals,” he says.
How often should you update your home?
Sellers are not the only ones who need to worry about updating their property. All homeowners ought to be updating certain features - some more regularly than others - to prevent having their home resemble a museum over time.
According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, homeowners can avoid having to spend large sums of money on updates just before they sell if they periodically update their property.
“The rule of thumb is to update your home every five to ten years. This does not necessarily mean you have to undertake costly renovations that involve ripping out tiles and knocking down walls. Often just changing small features such as door handles and taps can have the desired effect,” Goslett explains.
RE/MAX of Southern Africa explains how often homeowners ought to be updating certain household features: