With finance for residential property purchases still hard to come by, demand for rented property has improved greatly and buy-to-let investors are again evident throughout the Cape.
Steward says before an investor appoints a rental agent, he should make certain that the person has a track record of checking on and assessing tenants’ previous rental and credit history.
This is according to Lanice Steward, MD of Anne Porter Knight Frank who adds that in some less affluent areas 70% of bond applications are still being turned down.
Steward says very few property investors are able or willing to find and manage their tenants themselves and have to rely on rental agents to do this for them – for better or for worse.
Rental agents as with any other group, she says, vary greatly in dedication and ability - some are excellent while others really should not be in this line of work at all.
She says before an investor appoints a rental agent, he should make certain that the person has a track record of checking on and assessing tenants’ previous rental and credit history. Any tenant who has been blacklisted by credit bureaux should be suspect as should any who have fallen behind on previous rent payments or been disruptive in their communities.
Steward points out that in today’s rental market some buy-to-let investors favour gated communities and sectional title schemes because these maintain standards.
They are usually but not always well-managed by bodies corporate and managing agents, tend to be more secure and able to apply some control over residents’ behaviour, she says.
“If and when a tenant misbehaves some bodies corporate have the right to impose substantial fines and to double and treble these and charge compound interest if they are not immediately paid.”
However, Steward explains a tenant who is fined, say, for rowdiness late at night, or for blocking drains or for leaving broken windows or doors unrepaired, will often not pay the fines, and the landlord, seeing these fines mount up month by month, will be forced to pay them.
“It is, of course true that the tenant’s one or two months deposit can be seized to cover these outlays but with this type of tenant the full deposit – and more – will often be needed to rehabilitate the unit when his lease has expired.”
Steward says it is far better to leave a unit untenanted than to accept a tenant over whom there is a question mark – but lazy or greedy rental agents will often do this and will later make matters worse by not reporting problems to the landlord and by neglecting to submit detailed monthly report backs and accounts.
The moral of the story, she says is “Yes, buy-to-let is a good field to be in right now but be very careful about the rental agent you choose – and if his or her principal is not a good administrator, look elsewhere for your rental management service.”