Landlord rental income protection

With the constant flow of tenants entering the rental market, it is not very hard for a landlord to find someone who is willing to rent their property. However, just because the tenant is willing to rent the property, doesn’t mean they should, says Jerry van der Merwe, Broker/Owner of RE/MAX Proprentors, whose offices specialises in rental properties and tenant selection in the west and north rand area.

He notes that with recent changes to the South African law pertaining to landlords and tenants, along with the generic risk that is inherent when letting out property, it is important for a landlord to make sure that they select the right tenant. “Eviction of a defaulting tenant can often prove to be a complicated and costly exercise, so selecting a suitable and reliable tenant from the outset is paramount to the success of a buy-to-let investment,” says van der Merwe. “The landlord should never base their decision merely on gut-feeling, but rather on the results of a full background check. This is where services of a specialised rental agent become invaluable.”
Van der Merwe explains that a rental agent such as those at RE/MAX Proprentors will vet possible tenants by performing a full credit record check with credit bureaus such as ITC, as well as check references from previous landlords and get confirmation of employment. Once this process is complete, a comprehensive file of each tenant will be given to the landlord for selection and approval before any lease is concluded. “This gives the landlord the best possible chance of selecting a tenant who is not going to default. However if they do, a rental agent can assist the landlord with a strategy to deal with the situation in the most effective manner,” says van der Merwe.
He says that for landlords who choose to do their own property management and rental collection, RE/MAX Proprentors offers the unique service of a once-off lease. A rental agent will list and market the property and vet possible tenants through the normal process, however once a tenant has been found, the responsibility of managing the property will be handed back to the landlord.
According to van der Merwe, for further protection against defaulting tenants, landlords have the option of taking out a Landlord Protection Policy (Rental guarantee). The policy guarantees the monthly rental income, covers legal costs and provides the necessary qualified legal resources to achieve tenant eviction if required. “It is advisable for any owner of a fixed property who enters into written lease agreements for residential purposes to have some kind of income guarantee. The premiums are 3.5% of the monthly rental income, which can be deducted from the rental income when determining a landlord’s tax position. The policy provides cover for loss of income for up to six months and covers legal fees of up to R120 000. This will alleviate much of the emotional strain when dealing with a tenant who is no longer paying their rent,” says van der Merwe. 
Adrian Goslett, CEO of RE/MAX of Southern Africa, says that if a landlord decides to use the services of a rental agent, it is important that they select a real estate agent that deals specifically with rentals, due to the often intricate laws surrounding the relationship between landlords and tenants. “It is advisable that landlords use an agent who deals with rentals as part of their normal daily business practise,” says Goslett.
Leasing a property without the assistance of a rental agent can be a very time consuming and labour intensive exercise. “However, a specialised rental agent can ensure that the process of owning and renting out a property is far easier and will therefore provide the landlord with peace of mind,” van der Merwe concludes.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 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.
    • 20 Jun 2018
      The average size of bond granted in SA has grown 7,7% in the past 12 months to R934 000, according to BetterBond, the country’s biggest bond originator.
    • 19 Jun 2018
      In the current market, letting out a property can be a good option as rental demand remains strong, especially in the northern suburbs of Johannesburg. This is according to Chris Renecle, MD of Renprop. However he says that before homeowners let their property out, there are five key points they should make sure are covered before they market the property for rent and sign any lease agreements.
    • 19 Jun 2018
      The Capetonian dream is to live by the ocean with the iconic mountain making an appearance somewhere in the horizon. But, that dream comes with a hefty price tag that many simply cannot afford. But, should you venture some kilometres out of the city centre, entirely new realms of beachside bliss await you …
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us