Renting property - the future?

“If the interest rate does increase and the market sees a double dip as predicted, more and more people will be unable to qualify for finance and in turn will look to rent.  However, the hike in interest rate will also mean an increase in bond finance costs for the landlords. This combined with the increased costs of municipal services and the higher demand for rentals will mean that rental prices will increase as well. It's a simple principle of economics - if demand increases, prices increase too,” says Brickles.

Adrian Goslett, CEO of RE/MAX of Southern Africa, says: “Investors with buy-to-let portfolios have been able to capitalise on the current market conditions where rentals have seen continued growth due to the lack of finance available to many as those who are unable to qualify for bond finance have little choice but to enter the rental market.”

According to Brickles, although interest rates have been at the lowest we’ve seen in the last 38 years, many people are still not able to meet the necessary lending requirements of the National Credit Act. This coupled with the fact that many financial institutions are still reluctant to grant bond finance to at least half of the applicants they receive, has kept rental properties in high demand. He adds that demand in the rental market within the area has remained fairly steady over the last 12 month period with a slight increase of approximately 10% on the 2010 figures.

“The tenants in our areas typically fall within the gap housing market. This means that they are generally families that earn too much to qualify for low cost housing grants, but earn too little to qualify for a bond to buy a home that meets their requirements. These families usually earn a combined income of under R15 000 and would rather prefer to rent in an area such as Strandfontein than buying a property in a low cost area such as Tafelsig in Mitchells Plain for security reasons. While they may not be high income earners, they do have stable jobs and are usually very good tenants,” says Brickles.  

He notes that about 95% of the residential properties in the region are freehold properties, while only about 5% are sectional-title units. Brickles explains that many of the tenants in the area are families with children and are therefore looking for freestanding homes with at least three bedrooms and a garden. In most instances both parents are working and have a reasonable disposable income. Many of the young professional people from the area who are unmarried or have no children opt to move to more affluent areas such as Kenilworth and Rondebosch, where they rent an apartment. Although they get less home for their money in these areas, they are willing to trade it for the lifestyle.

“Rental properties are sought after and there are many opportunities in our area for investors looking to grow their existing buy-to-let portfolios or to perhaps start one. The housing here is well priced and there are always tenants available,” Brickles concludes.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 22 Jun 2018
      The rental market in many Johannesburg suburbs has shown encouraging signs of revival this year but it remains a competitive market and landlords who best cater to their market’s needs will reap the healthiest returns.
    • 22 Jun 2018
      Home design is constantly evolving to reflect the changing needs of society. We look at some of the ways in which our use of space is changing.
    • 22 Jun 2018
      While estate agents can help the seller with correctly pricing the property and marketing a property to the right pool of potential buyers, at the end of the day it’s the impression that the property will make on buyers that counts the most.
    • 21 Jun 2018
      Anyone who’s ever been involved in a building project that’s gone wrong will appreciate the importance of adequate insurance cover in the construction industry.
    • 21 Jun 2018
      A recent news story about a blind tenant caught in a legal battle with his body corporate over letters and notices he was unable to read and consequently comply with has raised the question: what are the legal obligations for landlords with disabled tenants?
    • 21 Jun 2018
      A trend that’s taken the world by storm in recent years is that of hygge (pronounced: hue-guh), a Danish concept that is about creating intimacy, connecting with loved ones and taking pleasure in small, ordinary things.
    • 20 Jun 2018
      Buying or selling real estate isn’t as easy as it is portrayed sometimes, especially if there is a death of a party during the transaction which can make it awkward, tricky and inconvenient.
    • 20 Jun 2018
      With interest rates remaining at historic lows and banks continuing to compete for mortgage finance business, first-time buyers with funds at their disposal are currently well-placed to gain that initial foothold on the property ladder, particularly in the light of the slightly lower growth rates currently experienced in residential property values.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us