Wellington rental market thrives

Situated 75 km north-east of Cape Town, at the base of one of the country’s oldest mountain passes, is the town of Wellington.

The region is at the centre of the Cape Winelands with an economy largely focused around agriculture such as wine, grapes, citrus fruit and the brandy industry.  The town is also known as an academic hub with many universities and schools attracting families and students from around the country.

The picturesque environment and excellent education facilities have largely assisted the property rental market in the area and it has continued to perform well over the last few years, says Marlize Van Schalkwyk, Broker/Owner of RE/MAX Country Living, whose office is located in Wellington and has already handled over 50 lease agreements this year.

According to Van Schalkwyk, the strong demand for rental property has led to a shortage of available rental property and an opportunity for investors looking to grow their rental portfolios. “I never have enough rental units to meet the demand of the family and student tenants needing accommodation. Wellington has truly become a buy-to-let investor’s paradise.  The area has achieved good returns, with 40m2 one-bedroom apartments generating a rental of between R3000 and R4000 per month on an asking price of approximately R460 000,” says Van Schalkwyk.

As long as there are universities, there will be a need for student accommodation, says Adrian Goslett, CEO of RE/MAX of Southern Africa.  “Privately owned off-campus student housing is always in demand, so investors looking for a rental property with a constant influx of tenants will find them near institutions for higher learning,” he says. “Sectional-title units that are located in secure complexes within proximity to a university campus as well as other amenities are particularly sought-after among students across the country.”

Van Schalkwyk notes that while her most popular rentals have been single room apartments and small two-bedroom apartments for students to share, demand for other types of rentals such as townhouses, security complexes, freestanding houses and farm cottages has also continued to grow. “Although there is a large contingent of students in the area, the tenants in Wellington vary from first-time employees and young couples to newly married couples and single people - anyone and everyone really. Different types of properties appeal to the different demographics of tenants in the area. The most requested price band for rentals among tenants is between R4500 and R5500, but some tenants are willing to pay up to R12 500 for a large, secure, upmarket freestanding residential unit,” says Van Schalkwyk.

She notes that increases of between 5% and 7,5% have been achieved on new lease extensions. “However,” says Van Schalkwyk, “we always have to take into consideration the current tight economic situation in South Africa.  Instead of raising the rent too much, I would rather advise the landlord to keep the increases moderate and retain good tenants. On some properties one needs to be careful not to overprice the rental, as properties have their ceiling as to what price one can charge for the unit. Overpriced rentals can result in the landlord sitting with an unwanted vacant unit.”

She advises investors who purchase rental property in sectional title complexes to be involved in annual AGMs and Body Corporate meetings as well as appointing competent managing agents. “Achieving the best possible rental for a unit is also determined by the maintenance and upkeep of the unit or complex it is situated in. I have noticed that when managing agents do not do a proper job and regular maintenance is not done, there is a negative image and perception of the complex. This often results in potential tenants not being prepared to pay the asked rent and moving on to better opportunities,” Van Schalkwyk concludes.

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