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Red-hot rental market in Polokwane

The residential rental market in the Limpopo capital is red-hot at the moment as consumers can often rent a better address than they could buy at a similar monthly bond repayment.
 


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Sandra van der Merwe of RealNet Polokwane Letting, which was recently named the best-performing rental agency in the group, says tenants can rent a home that would sell at around R1,1m for between R7000 and R8000 a month, whereas the bond repayment on such a home would be in the region of R11 000 a month. "And that represents a huge saving in the current tight economic climate," she says.
 
A large component of the Polokwanerental market is comprised of workers at surrounding mines. Some workers receive monthly housing subsidies of up to R9000, which enable them to rent comfortable homes in security estates.
 
A second component of the market is made up of ‘black diamonds’ who work in the city but prefer to spend weekends at their family homes in rural areas. Such tenants usually rent small city apartments for between R2700 and R3500 a month, she says.


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Meanwhile, economic pressures are also evident in a new trend of extended families clubbing together to rent large homes to share, or homes with an attached granny flat, says Van der Merwe. "Targeted homes fall in the rental price category of between R10 000 and R11 000 a month. Bond repayments on such properties would be around R14 000 to R15 000 a month."
 
Tight budgets have also seen an increase in the number of landlords who opt to manage their own rental portfolios, but Van der Merwe cautions that landlords are not always aware of the potential pitfalls. "Although they save the rental agent's monthly management fee, some landlords have lost considerable sums because they were not up to the task of vetting prospective tenants and tracking credit records."
 
She says that several landlords, especially investors who live in other parts of the country, have burnt their fingers and then approached her to untangle their predicaments. "It is particularly relevant to appoint an experienced agent to look after your interests if you are an absentee landlord," she points out.
 
For investors who nevertheless prefer to manage their own rental properties, she offers some advice. "Never, ever, neglect to check credit records - it is better to forego rental income for a short period while you source a suitable tenant, than to face the battle of evicting a non-paying tenant," she says.


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A second mistake many landlords make is asking for deposits that are too low, Van der Merwe says. Deposits equal to at least 1,25% of the monthly rental – and preferably more - should be set to cover losses in case the tenant absconds without paying, and the repairs or cleaning that may be necessary before the property can be re-let.
 
The third, and possibly biggest, hurdle for landlords managing their own properties is current legislation regulating the relationship between landlords and tenants. Van der Merwe says landlords should make sure they understand all aspects of this complicated legislation and, if not, they should seriously consider consulting a legal advisor.
 
She adds that landlords should also be wary of "fly-by-night" rental agents who ask very low monthly management fees. "Often such 'agents' are not properly trained or qualified and their lack of knowledge can lead to problems, which can cost landlords large sums of money. This is especially relevant in the case of unsuitable tenants who either damage the property and abscond, or fail to keep up with rentals and refuse to vacate the premises. The latter case can lead to the loss of several months' rental income and costly legal fees to evict," she cautions.


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