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Investors can set rental property price - expert

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Durban - Just Property Group CEO John Roberts says an increasing number of people are not qualifying for bonds as banks tighten their access to credit in line with the Consumer Protection Act (CPA) locally, as well as international banking regulations.

 South Africa has also experienced growth in consumers with poor credit histories and not qualifying for bonds.

This had boosted the buy-to-let market as investors had access to a steady stream of potential renters.

He was commenting as the group ended 2013 on a growing rental book and anticipated sound movements both in rentals and sales for the year ahead.

Tenants

The group's original franchise Just Letting was established in 2001 as South Africa's first specialist residential rental company, followed by Just Commercial and Just Residential to offer consumers the whole property range.

Roberts said buy-to-let investors were virtually setting their own rental prices in popular suburbs with prospective tenants outstripping supply three to one.

The demand was particularly high in KwaZulu-Natal’s Upper Highway area and Durban’s central business district.  Upper Highway included Kloof, Gilletts and Hillcrest and owners could secure rentals on par with Umhlanga Rocks.

The group had seen growth in the property market below R1m with this accommodation - typically a two bedroom-one bathroom unit of 110m2, securing monthly rentals of between R4 500 to R5 000.

There was also movement in the top-end of the market where companies paid rents ranging from R16 000 to R25 000 per month for their executives.

While anticipating the rental market to continue improving in 2014, Roberts was realistic about the impact e-tolling, the general election and growing strike action would 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.

Maintenance

"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 cited landlords privately managing their properties as the greatest opportunity for growth.

TPN Credit Bureau statistics reflected 70% of landlords managed their own properties as they did not recognise the value in having agents involved with the month-to-month issues. These included rental collection, maintenance, utility payments, tenant mediation, credit checks, vetting and lease renewals.

The new credit indemnity, whereby all debts below R10 000 will be removed from credit bureau records, will also affect searches for credit checks, Roberts explained.


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