Avoid risk when renting

No rental agreement is without risk, but this doesn’t mean rentals don’t offer lucrative opportunities for all parties involved.

According to Stefan du Plessis, managing member at Rent Protect, a niche product provider that offers protection on rental income, there are certain best practice principles that help all parties avoid the typical risks associated with rental agreements.

“The absolute foundation that ensures the protection of your rights, whether you are a tenant, rental agent or property owner, is a balanced and iron clad rental agreement. This is particularly important for tenants who are often not completely aware of their rights.

“The next essential element for tenants is to make sure that they establish a good working relationship with the rental agent and landlord. This is an investment in their own reputation because good tenants get first pick when new properties come up for rent. Good tenants also get some leeway when times take an unexpected turn for the worst,” says du Plessis.

Always stuck in the middle are managing rental agents. Risks can infiltrate from both sides. Defaulting tenants, property damage, unhappy landlords and legal procedures are a few of the many challenges property managers face.

Du Plessis says the most successful property management companies, commercial or residential, need to engage with service providers that offer them protection, and create a better service offering for their clients. Tenant vetting services and rental insurers are a few examples of companies that can improve a rental agency’s client offering.

The party with the most to lose from an investment point of view is the property owners. Du Plessis says that whether you choose to manage your property yourself or make use of an agency, the pitfalls still need to be negotiated.

“It’s essential to make sure that your rental agreement is reviewed by an experienced and qualified property lawyer. Rental legislation is complex and shrouded in jargon, so if your agreement is not up to scratch, as a property owner, you could run into problems.

“If you decide to appoint a rental agency you need to make sure you are dealing with a legitimate service provider. A current fidelity fund certificate issued by the Estate Agency Affairs Board is a must. Good rental agents have the standard NQ4 and NQ5 qualifications, and are familiar with the ins and outs of the Rental Housing Act and the inner workings of various rental housing tribunals,” says du Plessis.

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