select
|

More need for professional agents as credit amnesty looms

There’s a credit amnesty coming – and it will make it even more important for property sellers and landlords to enlist the help of qualified and experienced estate agents.
 
That’s the word from Jan Davel, MD of the RealNet estate agency group, who says the amnesty will no doubt be welcomed by many, but will make it extremely difficult to assess the creditworthiness of potential homebuyers and tenants.
 
The amnesty, proposed by the Department of Trade and Industry (DTI) and the National Credit Regulator (NCR), is expected to become law before the end of the year, and the most likely effect will be that credit bureaux are required to remove all adverse listings relating to debts of less than R10 000 going back to 2006 (irrespective of whether these have been settled or not), as well as all adverse information about paid up debts or judgments on a continuing basis.
 
It is anticipated that this will immediately apply to between 1,5million and 2million people with impaired credit records, most of them understood to be earning less than R15 000 a month.
 
“But in effect,” notes Davel, “the most the bureaux will now be able to do for anyone running a credit check on any consumer will be to provide information about current unpaid debts of R10 000 or more.
 
“Credit grantors will not have access to any records of previous bad payment habits, defaults or judgments, so there will be no way for them to assess how consumers managed their debt in the past or whether they are good or bad credit risks.”
 
In the real estate sector, he says, this will make it all the more important for landlords, for example, to engage the services of professional rental property management agents who can help to overcome this problem by obtaining additional information such as salary slips, bank statements and access a rental payment record from the Tenant Profile Network (TPN).
 
“Secondly, property sellers will need to be much more cautious about accepting offers on their homes – and rely more on professional agents and their mortgage origination partners to ensure that prospective buyers are properly pre-approved for the home loans they would require to fulfil the transaction.
 
“Sellers can suffer considerable financial loss if they accept an offer and take their property off the market only to discover later that the prospective buyer does not qualify for the necessary bond.”
 
Meanwhile, he says, would-be homebuyers can expect to encounter even stricter credit criteria than those in place at the moment when applying for home loans. “This is evident from the fact that the banks have strenuously opposed the idea of the credit amnesty, precisely on the grounds that it will increase risk and could result in consumers borrowing more than they can afford.
 
“What is more, they have said that their increased risk would probably have to be passed on to consumers in the form of higher interest rates on home loans and other debts – and noted that those who haveworked hard to pay their debts and keep their credit records clean would very likely be unfairly prejudiced in the process.”


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 21 Feb 2018
      Given the hand they were dealt, government has performed a delicate balancing act which it is hoped will serve to reignite confidence in investment in South Africa, regain our global credibility and satisfy the credit ratings agencies, says Dr Andrew Golding, chief executive of the Pam Golding Property group.
    • 21 Feb 2018
      The real estate mantra, ‘location, location, location’ remains a strong market influence regardless of the prevailing economy, with suburbs like Rondebosch enjoying the buffering benefit of being ideally situated.
    • 21 Feb 2018
      These days most buyers are using online property portals like Private Property when house hunting due to the convenience, up to date information and variety on offer. “The property portals have revolutionised the way buyers shop, but they do need to be cautious – viewing photos online is no replacement for viewing the property in person,” says Bruce Swain, CEO of Leapfrog Property Group.
    • 20 Feb 2018
      Owning a home is a milestone that most South Africans aspire to. Becoming a homeowner is a step towards growing personal wealth and owning an asset that appreciates in value over time, provided of course that the correct principles are applied during the buying stage of the process, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 20 Feb 2018
      The suburb of Greenstone in Johannesburg east came to be over the last two decades. “In the beginning, it was literally just a hill with not so much as a shopping centre,” says Michael Levy, Property Consultant at Jawitz Properties Bedfordview. Today it has plenty shopping facilities and is fully built, boasting high-density, upmarket housing and residential estates, though still has a few pockets poised for commercial development.
    • 20 Feb 2018
      A major shift in the ageing paradigm has precipitated an equally dramatic transformation in the retirement sector, with modern accommodation options worlds away from the conventional model.
    • 19 Feb 2018
      Possibly one of the biggest sources of contention between landlords and tenants surrounds the rental deposit. “Most tenants rely on getting their rental deposits back when moving, so that they can use it to pay a deposit on their new home. Having it withheld or even having large amounts deducted can lead to a lot of distress,” explains Bruce Swain, CEO of Leapfrog Property Group.
    • 19 Feb 2018
      Situated approximately halfway between Johannesburg and Pretoria, Midrand was established in 1981 and forms part of the City of Johannesburg Metropolitan Municipality. It has become one of the major business hubs in the country with major pharmaceutical, textile, telecommunication and motoring giants situated within its boundaries.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK