RENTING - THE GOOD, BETTER, AND BEST NEWS
Wakefields puts the residential rental market under a microscope
The good news is that, according to data gathered for the last quarter of 2019 by TPN Credit Bureau's Vacancy Survey, the KZN rental market is relatively stable. The TPN Vacancy Survey recorded a national vacancy rate of 8.97% for the fourth quarter of 2019, but KZN fared better than most with a 5.9% vacancy rate - it's a significant improvement, and places landlords in a more favourable position. "Countrywide," says TPN, "the scales remain tipped in favour of the tenant, which leaves the landlord seeking innovative ways to overcome the prevailing challenges. "
Of course, some suburbs or parts of suburb are more in demand than others, which means some areas have an oversupply, others an undersupply. Landlords have to think twice about their rentals and annual increases, and equally, be creative about their rental offering so it's more attractive to tenants than the flat next door.
TPN describes the under R3 000 category as the strongest for landlords, because demand is high in that price band. The next band of R3 000 to R7000 comes out second best, followed by the R7 000 to R12 000 band. Rentals over R12 000 have the highest vacancy rates.
Currently, Wakefields' branches and rental division report an uptick in prospective tenants. Reasons? Some because their landlords are selling, others because of unrealistically high rental increases, and others who can no longer afford the rental they've been paying. They report too, that garden cottages continue to be popular, and in short supply. Corporate rental enquiries have risen, in particular in areas such as Umhlanga and Scottburgh.
Wakefields' rental division notes that landlords who aren't achieving the rentals they'd like, are utilising as many rental agencies and online platforms as possible to find a tenant who will pay that rental. That's not always an advisable approach, as tenants need to be very stringently vetted - a tenant with a poor credit history can slip through the net, and the landlord is then left with a delinquent tenant. Wakefields has very stringent rules for placing tenants, and although that may mean it could take longer to find a tenant, it's absolutely critical to find the right tenant.
For landlords and tenants, the market requires understanding. Overpricing a rental often results in vacancies; over demanding tenants often results in no rental. The property market is very reactive to the economic climate, and tenants and landlords need to be and do likewise.
THREE WAKEFIELDS BRANCHES
Three branches in KZN discussed their rental divisions:
Who is renting?
The market here is dominated by those who have yet to qualify to buy, and they are looking for rentals in the lower priced band as described by TPN.
State of your rental market
Although we have a good supply of one bedroom rentals in the region of R4000 coming on to the market, they're let in a matter of days. The demand there is high, and we can't keep up with it.
Slower to be let out, are four bedroomed houses In the R12000 and over bracket, a sector which TPN pinpointed as less in demand.
Tenants or landlords?
We have more tenants than properties, so demand is high. Importantly, tenants won't pay 'overpriced' rentals - most are well aware of the going rate for rentals in a particular area.
Tenants are choosing to remain in the property they're currently renting, rather than move - it's more cost effective than funding a new deposit, or the often tricky retrieval of their current deposit from a reluctant landlord.
For landlords in this area, most tenants find a 10 percent rental increase too high. Six percent is the figure most tenants can bear. Low salary increases and the high cost of living is impacting on this sector of the market.
Who is renting?
Many are corporate overseas clients. Security is a major driver for them, and The Pearls answers those concerns.
State of your rental market?
Demand is very strong, with considerably more leases being signed now. Most owners do not want to sell as they consider these apartments to be investment properties, and prefer to rent them out.
We have not seen much in the way of rental increases year on year for the last four years in this upper end of the market (about 10 percent over that period) - it's the most sensitive sector, as per TPN, and although we're experiencing demand, there's no appetite for overly high rentals. Increases are only likely to happen when supply decreases. When Pearl Sky launched, 500 units came on the market, so there was an oversupply - that will always depress rentals, but recently, demand for the apartments has risen noticeably.
Tenants or landlords?
The demand is certainly there for those landlords who have come to terms with market-related rentals. Our tenancy rate has increased, but tenants aren't accepting substantial annual increases.
Who is renting?
Mainly medical staff at the new hospital, and enquiries are escalating for student accommodation for the new educational facility on the cards.
State of your rental market
Rental demand, both commercially and residentially, is high - the amount of interest immediately generated when a rental property is available has definitely increased.
Two thirds of our demand is for sectional title property rentals in the R3000 to R7000 band, and one third for freehold houses in the R7000 to R12000 band.
Landlords or tenants?
There has been downward pressure on rentals, both commercially and residentially. Landlords are competing for new good tenants and encouraging existing tenants to stay at renewal time, so rather than increase rentals, they're offering to maintain them at the same level for a period of time. The rental rates have on average held steady over the past few years.
Five Tips for Tenants looking to rent:
- Understand that there is a process involved and plan ahead - you will not be able to see a property today and move in tomorrow.
- Know who your rental consultant is - ask to see their Fidelity Fund Certificate, visit them at the agency. Don't take it at face value that the person you are meeting at the property is a genuine rental consultant.
- Never hand over cash to anyone. Do an EFT and make sure you get the bank details directly from the rental agent (that you have now ensured is authentic).
- Know and understand your lease before signing, and if there is anything you're unsure about, ask for an explanation.
- Insist on everything in writing, and that it forms part of the lease. For example, if you request work done before you move in and the Landlord agrees, ensure it is recorded under the Special Conditions clause (all lease agreements should have a clause like this) with specifics - details of what was agreed and by when.
Five tips for Tenants already renting:
- Most important - pay your rent on time and in full. There are so many checks in place now that it is not hard to find out what your rental payment history is and, if you are not prioritising your rental payments, you will battle to find a new home to rent if and when it comes time to move on.
- Ensure you have an open and healthy relationship with your Landlord. Don't become unreasonably demanding - the relationship will fracture.
- Be aware that the property you are renting is an investment for your Landlord - that is how he will always view it when there are tenant's demands or costs.
- Do not withold your last month's rent and expect the deposit to be used in lieu - this is against the law and could mark you as an unreliable tenant. The deposit is a damage deposit and is to be used as such.
- Don't trouble your Landlord with small issues you could easily fix yourself. That way, when you do have a problem you really need him to fix, he is likely to be far more willing.
27 Feb 2020
Author Anne Schauffer
