Buy-to-let investors are virtually setting their own rental prices in popular suburbs with prospective tenants outstripping supply three to one, Just Property Group CEO John Roberts says.
The demand is particularly high in KwaZulu-Natal’s Upper Highway area and Durban central business district. The Upper Highway area covers Kloof, Gilletts and Hillcrest and rentals on par with Umhlanga Rocks can be obtained, said Roberts.
He says an increasing number of people are not qualifying for bonds, as the banks have tightened access to credit in line with the Consumer Protection Act (CPA) locally, as well as being guided by international banking regulations.
South Africa has also experienced growth in consumers with poor credit histories, who do not qualify for bonds.
This has boosted the buy-to-let market, as investors have access to a steady stream of potential renters.
There has been growth in the rental accommodation property market below R1m, with typically a two bedroom, one bathroom unit of 110m² securing monthly rentals of R4 500 to R5 000.
There has also been movement in the top end of the market, where companies pay rents ranging from R16 000 to R25 000 per month for their executives.
Roberts anticipates the rental market to continue improving in 2014, but is realistic about the impact e-tolling, the general election and growing strike action will have on disposable income. The debt ceiling crisis in the US could also potentially ripple into the local economy, specifically in terms of market confidence.
“Investors are adopting a wait-and-see approach, but there are expectations that the rental market will be strong into the year ahead,” he says.
Roberts cites landlords privately managing their properties as the greatest opportunity for growth. Statistics of TPN credit bureau reflect that 70% of landlords manage their own properties, as they do not recognise the value in having agents involved with month-to-month issues.
These include rental collection, maintenance, utility payments, tenant mediation, credit checks, vetting and lease renewals.
The new credit indemnity, which will remove all debts below R10 000 from credit bureau records, will also affect searches for credit checks.