Rental properties priced for less than R5 000 per month are said to be popular in some Western Cape areas with tenants paying rent on time.
RE/MAX predicts to see a marked increase in the rental market activity in the next few months especially in the less than R5 000 per month price bracket in areas including Grassy Park, Strandfontein, Mitchells Plain, Lotus River, Ottery and Lansdowne.
Mark Brickles, broker/owner of RE/MAX Ultra Select says if the interest rate does increase and the market sees a double dip as predicted, many people will not afford to buy and will rent instead.
He says that an increase in interest rate will mean an increase in bond finance costs for landlords. This combined with the increased costs of municipal services and demand for rentals will push rental prices up as well.
Brickles explains that demand for rental properties in the areas where he operates has remained fairly steady over the last 12 month period.
“The rental market is very good as people are unable to obtain mortgage finance and do not have money saved for deposits.”
He says many would-be home buyers are declined by banks even though they do not have impaired credit records. Banks, he says, often feel that applicants are over exposed. However, he says tenants renting out their properties are paying rent on time.
“The tenants in our areas typically fall within the gap housing market. This means that they are generally families that earn too much to qualify for low cost housing grants, but earn too little to qualify for a bond to buy a home that meets their requirements.”
These families usually earn a combined income of under R15 000 and would rather prefer to rent in an area such as Strandfontein than buying a property in a low cost area such as Tafelsig in Mitchells Plain for security reasons. While they may not be high income earners, they do have stable jobs and are usually very good tenants, says Brickles.
Asked about rental prices, Brickles says they range between R3 000 and R5 000 per month. A three bedroom house in Mitchells Plain has a rental price of R3 000, in Strandfontein R3 500, Grassy Park R4 500 and Lansdowne R5 000 per month.
Because of these reasonable rental prices in these areas, landlords can afford to be choosy and demand for rental properties is said to be increasing.
He says that about 95 percent of the residential properties in the region are freehold properties, while only about 5 percent are sectional-title units.
Brickles explains that many of the tenants in the area are families with children and are therefore looking for freestanding homes with at least three bedrooms and a garden. In most instances both parents are working and have a reasonable disposable income.
Many young and single professional people without children opt to move to more affluent areas such as Kenilworth and Rondebosch, where they rent an apartment.
Although the apartments are usually smaller than the homes in these areas, they are willing to trade it for the lifestyle in Kenilworth and Rondebosch.
“Rental properties are sought after and there are many opportunities in our area for investors looking to grow their existing buy-to-let portfolios or to perhaps start one. The housing here is well priced and there are always tenants available,” he says.
RE/MAX said is a statement: “ investors with buy-to-let portfolios have been able to capitalise on the current market conditions where rentals have seen continued growth due to the lack of finance available to many as those who are unable to qualify for bond finance have little choice but to enter the rental market.”- Denise Mhlanga
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