Cape Property May 2024 - Weekend Argus

Take advantage of Cape’s rental boom

A step-by-step guide to becoming a successful landlord

DESPITE the general mood brought on by politics and the interest rate cycle, the market in the Western Cape remains buoyant, with increased rentals recorded.

According to the latest report by Rode Property Consultants, flat vacancies have dropped nationally and Cape Town has the lowest vacancy in the country and highest rental returns. Some two-bedroom flat rentals on the Atlantic Seaboard, for instance, fetched as much as R75 000 a month for landlords in the first quarter of this year.

While this may seem like an ideal opportunity to make money by going from property owner to landlord, Seeff rental agents suggest you follow these 11 steps first:

1. Price your rental right

Each area generally has price bands. The more expensive the rent, the harder it could be to find a tenant. By correctly pricing your rental property, you would be able to attract more tenants and probably keep it occupied, with a lower risk of tenants wanting to move out to find cheaper accommodation.

2. Emergency Fund

Put money aside in case of emergencies.

be checked for clauses regarding vacant properties.

Alfred Wilsenach, division manager of underwriting at Genric Insurance, says landlords should also consider Rental Insurance to protect themselves from the financial repercussions of tenants failing to pay rent, as well as the costs that come with eviction should this be necessary.

4. Tenant verification Do credit and affordability checks. A background reference check will give some insight into the person who will be occupying your property.

5. Security deposit

Anything upwards of one to two months is the norm. It must be invested in an interest-bearing account to the benefit of the tenant. You may not use any of the funds during the lease. Only at the end of the period can you access the funds to cover any rental arrears or damage.

6. Be wary Some tenants offer to pay rent in advance for several months so that they can circumvent the recommended verifications. Many scammers use this to gain access to rental properties, and it might be the last time you see any rent, says Steve van Wyk, the licensee for Seeff Centurion.

7. Rental agreement A solid

rental agreement that protects your interests and sets out the duties and obligations of the landlord and tenant, as well as breach of lease conditions and procedures, should be drawn up and signed by both parties. This should be done even if you are renting out only part of the property.

8. Duration The contract must set out the duration of the lease, the rental amount, and when and how it must be paid, as well as conditions of use of the property. If it is a sectional title or estate property, then the tenant must be given a copy of the rules of conduct. Be sure to point out specific arrangements that may apply such as parking, visitors and noise.

9. Inspections An incoming property inspection must be done which details any damage or defects and must be signed by both parties. It is advisable to inspect the property during the lease period, but this must be done by prior arrangement with the tenant. You cannot use spare keys to enter the property at all, nor can you simply arrive at any time. At the end of the lease, another inspection must be done and compared with the incoming inspection.

Although “fair wear and tear” is acceptable, any additional damage could put the deposit at risk, says PG van der Linde, the rental manager for Seeff Pretoria East. Aside from any potential rental arrears, the landlord can also deduct the cost of repairs. If there are maintenance issues during the lease period, the tenants must raise this with the landlord. They cannot wait until the lease expires. The deposit (net of any repair costs) must be refunded to the tenant within 14 days. Disputes can be lodged with the Rental Housing Tribunal.

10. Tax Speak to a tax consultant because the rental income will be subject to tax. The income must be added to your normal income. Certain expenses related to the property can, however, be deducted. Visit the Sars website for more information.

11. Rights Bear in mind that under the Consumer Protection Act, the tenant can vacate the property before the end of the lease, provided they give proper notice as set out in the act. As the landlord, you will, however, be entitled to charge a reasonable amount to cover the costs of sourcing a new tenant, any loss suffered and any repairs needed. Stay updated with rental legislation and consider professional property management.