select
|

Is Rental Insurance the Solution to Landlord Risk?

The rental property market in South Africa is big and growing as more and more people either don’t want to or can’t afford to purchase a home to live in. On bright side the market appeals to landlords wanting to earn a passive income on their rental properties while tenants are exempt from the hassle and cost inherent in property maintenance.
 
On the other hand landlords face the risk of non-payment by tenants as well as property damage and even theft. Tenants aren’t as vulnerable but, can fall prey to unscrupulous owners who don’t do proper maintenance or illegally hold on to security deposits. Added to this tenants are often asked for two or even three month deposits – something many South Africans struggle to gather. 
 
“When it comes to rentals we agents most often have to deal with issues surrounding security deposits and non payment of rent,” explains Harry van der Linde of Leapfrog Pretoria East, “the issue of money often makes people quite emotional – especially when the rent’s not coming in -while there are also a lot of misconceptions out there as to how deposits work”.
 
A rental revolution?
 
As with any contract both parties stand a lot to gain, but also face certain financial risks – risks a company called Rentshield aims to mitigate by offering ‘zero deposit’ leases and financial protection for landlords. 
 
How it works for property owners
 
Rentshield is a product of Torus Capital and offers landlords a number of free services such as an online tenant vetting facility and conducting property inspections. According to their website they offer to protect the landlord in terms of non- payment by the tenant for up to three months as well as repairing property damage caused by the tenant (up to the value of one month’s rental).  The company will also undertake an eviction process, if necessary, covering the legal fees to the value of R50 000. 
 
“When it comes to selecting a tenant the key thing is to vet the person properly – financial protection is a great safety net, but to be honest you likely won’t need it if you’ve checked out your tenant properly,” says Harry.
 
How it works for tenants
 
The main benefit for tenants who qualify for Rentshield is of course the ‘zero deposit’ rental option offered.  Kruger believes that “While I by no means insist on a three month security deposit I’ve certainly found that the kind of tenant who’s been disciplined enough to save up for it is generally a better lessee.  Based on that I’d be wary but by no means would I deny a tenant who qualified for a zero deposit option and could prove it”.
 
At the end of the day companies like Rentshield offer insurance and, like with all forms of insurance it’s important to read the fine print. “Personally I think the idea could work quite well, if of course  people did their homework and understood exactly what they’re covered for and what not,” says Harry


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 17 Jan 2018
      While the current property market may still favour buyers, it doesn’t mean that they shouldn’t be well prepared before putting in an offer to purchase.
    • 17 Jan 2018
      Lightstone lists Blair Atholl as the most expensive suburb with an average house price of R11.2 million, followed by Westcliff (R10.5 million), Dunkeld (R9.3 million), Sandhurst (R9.1 million) and Inanda (R7.2 million).
    • 17 Jan 2018
      As it currently stands, there are four main ways in which a home can be bought in South Africa, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, who adds that deciding in which legal entity to purchase the property is not a decision that should be entered into lightly, as each has its pros and cons.
    • 16 Jan 2018
      The start of the new year is symbolic of new beginnings. A good time to take stock of one’s possessions as well as how necessary they actually are. However, seeing as the process may appear daunting – a plan goes a long way.
    • 16 Jan 2018
      The Western Cape is still in the throes of a severe drought and many households have to adjust the way they use and save water. It is a little more complicated in sectional title schemes, however, as it is not that easy to implement grey water systems for multiple users and it is also difficult to monitor water usage accurately if there are no separate water meters
    • 15 Jan 2018
      In ideal rental situations, when a lease is signed the tenant will stay for the full duration of his lease without any complications and the landlord will uphold his obligations, creating a win-win situation for tenant and landlord.
    • 15 Jan 2018
      The Atlantic Seaboard’s housing market has stoically withstood the brunt of the growing economic and political instability, consistently achieving double digit growth way above the national average, however, in 2017 South Africa’s most resilient market finally began to yield to the pressure.
    • 15 Jan 2018
      Sectional title insurance can be a little confusing and, as a new owner, you may be tempted to just assume your body corporate has you covered. While this may be the case, understanding the extent of your coverage and your personal liability is the only guaranteed way to protect yourself against potentially costly oversights.
        
    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