Residential Rental Monitor - Third Quarter 2020
South Africa - TPN
In short, the recent set of TPN indicators point to a muted improvement in the payment performance of the residential tenant population, but to the continued weakening of the Residential Rental Market.
Tenant payment performance did improve mildly in the 3rd quarter, following the major lockdownrelated weakening of the 2nd quarter, but it remains a weak situation.
TPN average rental inflation continued to slow in the 3rd quarter, and at 0.65% year-on-year is moving further into negative territory in “real terms”, i.e. when adjusted for economy-wide inflation. Average rental deflation now appears likely in the near term.
Low rental inflation, however, does contribute significantly to the low CPI inflation rate of 3%, along with a weak economy that keeps demand-side inflationary pressures weak. This in turn keeps the pressure off the SARB in terms of interest rates. The 7% Prime Rate, 3 percentage points below the 10% as at the start of 2020, looks set to remain in place for the time being, therefore, and this does give the Household Sector some financial relief.
However, low interest rates appear to have been responsible for a surge in home buying, with 1st time buying being fairly strong of late. A portion of 1st time buyers were likely rental tenants previously, which leaves something of a gap in the rental market. Strong home buying activity is thus seen as a partial contributor to the ongoing rental market weakness in the 3rd quarter, along with ongoing economic and employment weakness.
The TPN Market Strength Index continued to point to an increasing excess supply over demand in the 3rd quarter, while the average vacancy rate rose noticeably again in the 3rd quarter and is now in double-digits.
Is Caveat Emptor the key to Conveyancing Reform?
UK - TodaysConveyancer
The past couple of years has been full of discussion on how to improve the home buying and selling process. Indeed, at a roundtable meeting held by the Council for Licensed Conveyancers (CLC) it was noted that the rapid adoption of technology due to Covid-19 could see the conveyancing process move from an emphasis on the buyer and caveat emptor to one of vendor disclosure.
The need for change has always been evident, especially when one reflects that, apart from a botched attempt in 2007 to make changes with the introduction of the home information pack, this country has not seen any major property legislation reform since 1925.
The question of whether there exists sufficient political will, and indeed strength, to bring about much needed change is debatable, and only time will tell if anything comes from some of the initiatives in play.
The need for change has always highlighted some of the major deficiencies which exist within, what has become, a very archaic conveyancing system.
Selling your business as a going concern
South Africa - Garlicke & Bousfield Inc
Usually when a business is sold it is a taxable supply that is subject to value added tax (“VAT”) at the standard rate of 15%. There is however a provision in the Value Added Tax Act 89 of 1991 (“VAT Act”), section 11(1)(e), which allows for the sale of a business at the rate of zero percent, provided certain requirements are met.
Both the seller and the purchaser must be registered VAT vendors to qualify for the zero rating. If a prospective purchaser is not registered as a vendor for VAT, the purchaser should have at least applied for registration before concluding the agreement. The agreement should cover the situation where zero rating does not apply due to the requirements not being met, and in such circumstances the purchaser should become liable to pay VAT at the standard rate.
Garlicke & Bousefield