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Be careful of high rental increases

In the current property market, landlords who continue to think that they can raise residential rentals annually by 10% (or even more) are creating a situation in which they are likely to lose tenants – and such lost tenants will be difficult to replace.

This was one of the more important messages delivered recently by Tony Clarke, Managing Director of the Rawson Property Group, to Rawson Rentals franchisees who had convened to plan strategies for the year ahead.

“You have to realise and accept,” said Clarke, “that there will almost always be some other landlord, probably advised by a sensible agent, who will be offering a more favourable, more equitable deal. If your landlord insists on being greedy, they will find that they will lose out.”

Really good tenants, those who pay on time and care for the property, said Clarke, are not easily found and in the current market should be cherished and held onto.

“If this means settling for only 5 to 7% increases annually, so be it,” said Clarke. “The difference between a 10% and a 7% rental increase can be as small as R150 - the equivalent of a take away pizza and soft drink today. Is it really worth losing a reliable tenant for an almost insignificant amount?”

Although there is in some areas a shortage of rental stock, it has also to be appreciated, said Clarke, that a new inflow of stock has come about as a result of struggling bondholders putting their homes up for rental so as to give themselves a breathing space.


“Those landlords who complacently believe that what they are offering is so good that they can raise rentals indiscriminately will be disillusioned and rental agents have a duty to guide landlords into the correct thinking on these matters,” said Clarke.


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