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Significant ongoing payment administration and strict industry regulations are hurdles for many rental property entrepreneurs. PICTURE: ROMAIN DANCRE/UNSPLASH
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Property boom expected to ‘level out’
RENTAL OPPORTUNITIES ARE ON THE UP AND UP AFTER 18 months of Covid-19 and an ongoing economic slump, residential rental properties provide an exciting opportunity in previously under-serviced areas. PayProp chief executive Jan Davel says residential rental business opportunities are plentiful in the fast-growing formal, private rental sector in emerging market areas, such as Soweto in Gauteng and areas on the Cape Flats in the Western Cape. “People will always need a place to stay, and, with growth in both residential rental demand and supply according to the latest PayProp Rental Index (Q2, 2021), landlords and tenants will need competent agencies in these areas with the necessary tools, knowledge and credentials to manage their investments and tenancies.” Hurdles for many property entrepreneurs focused on rentals are the significant ongoing payment administration and strict industry regulations. Davel says that it’s important to identify the right tools that will automate all the critical payments required each month. “Consider all the invoices, statements, reminders, receipts, reconciliations and payments at month-end. Even if you manage just 10 properties it can add up to a day or two each month.” He says finding the right technology to automate much of the administration makes rentals a far more viable option for many property professionals.
When unemployment increases, fewer buyers can afford to purchase property. PICTURE: POK RIE/PEXELS
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CTIVITY within the national housing market is expected to “level out” in response to the challenging economic circumstances ahead, says Adrian Goslett, regional director and chief executive of Re/Max of Southern Africa. When unemployment increases, spending power declines and fewer buyers can afford to purchase property. “This translates into a buyers’ market where the supply of properties outweighs
the demand from buyers. “Those whose salaries are affected might become unable to afford the costs of their home loan, which will mean more properties will enter the market, with some falling claim to bank repossession and distressed property sales.” Goslett says, in time, this can put downward pressure on asking prices. It is hoped that an increase in the vaccination rate will prevent any further restrictions on economic activity and
allow for a period of recovery. “Provided that the economy is allowed to operate without any further restrictions, it is possible for it to begin a gradual recovery and for the downside risks to the local housing market to be contained.” While unable to predict if and when the property market will be affected by the current economic conditions, Goslett remains optimistic about real estate as an investment vehicle.
COVID SHIFTS PEOPLE’S FOCUS TO WELL-BEING
People want to live in tranquil spaces but still feel part of a community. PICTURE: PEN_ASH/PIXABAY
A 2021 survey by Blok, the property development company, has revealed that people are more concerned about their well-being than they were before the pandemic. And this is affecting where they want to live. Jacques van Embden, Blok managing director, says the survey, titled “Covid-19’s Impact on the Human and the Home”, found that: • 45% of respondents admitted that Covid-19 had had the greatest impact on their mental health. • 36% said that their financial situation had been affected. • 6% said that nothing had changed for them. • 92% said that the pandemic had led to them making significant lifestyle changes, with the aim of prioritising their health. • 97% noted that as a result of the stressors over the past year, finding a work and home life balance had become their focus. “Consumers are fighting to reclaim their mental health through finding a better sense of balance with more emphasis on wellness… While they may sound diametrically opposed, we’ve seen a growing need for home as a sanctuary, coupled with a desire for community.” Van Embden says consumers are seeking a space where they can relax and unwind but they also want to feel part of a neighbourhood.
Be alert when joining a property stokvel PROPERTY stokvels have become popular investment vehicles but buyers looking to take advantage of what they can offer must ensure everything is above board. In stokvels that are working well, says Shaun Rademeyer, chief executive of MultiNET Home Loans, the returns for investors are incalculable. However, one of the concerns around property stokvels is that the founder usually administers the stokvel at their sole discretion, with carte blanche to run and manage
the scheme as they want. To ensure transparency, he says, members must be given clear direction on what recourse they have if they’re dissatisfied with the administration of the scheme. They also need to know exactly how the ownership of the purchased property will work, whose names will appear on the title deeds and how the decisions are made when it comes to allocating property. “There are also tax implications where multiple transfers of property are involved, so it is imperative
that these are unpacked in the constitution of a property stokvel and that members understand what could happen to them if the tax laws are breached.” Regardless of who runs the stokvel, he says due diligence is essential and members must: • Ensure the stokvel has a clear and robust constitution. • Know the leadership and membership structure. • Ensure they know everything about where their money will be invested and how it will be used.
Stokvels offer many benefits – provided everything is above board. PICTURE: CHRISTINA MORILLO/PEXELS
