Renting and letting property – how to determine what's fair to charge or pay
The Covid-19 pandemic, lockdown, and the resultant recession – by far the worst in South Africa’s history - has driven down the cost of renting residential property.
Renters (those with jobs) seldom had it this good.
Many landlords, however, are forced to rethink and, in many cases, lower what they charge to find someone with good standing who can afford their property.
There is a limit to how far rentals can fall; landlords still have home loans and maintenance costs to cover.
John Maytham asked Tamira Gumzburg for tips on deciding on an appropriate rental.
Gumzburg is the Chief Marketing Officer at rental agency HouseMe.
How to set your rent (according to HouseMe)
Step One: Calculate your yield
Calculate your input costs such as bond repayments, levies, taxes, and rental agency fees.
If possible, add a buffer of about 12% onto these costs for unexpected expenses such as maintenance emergencies and vacancies.
Step Two: Do some market research
Go to a popular online marketplace and enter the search criteria matching your own property.
Ideally, you want to be at or under that average price.
Step three: Test the market
Post your listing at your researched price and see how many prospective tenants respond.
Step four: Reassess your costs
Landlords struggling to find reliable tenants at their preferred rental prices will need to find ways to lower their price.
A lot of tenants are struggling to afford the same rental they did a year ago. If you’re a landlord, and your tenants pay well and you trust them, then it’s more important to hold on to them than to try and find a higher rental.Tamira Gumzburg, Chief Marketing Officer - HouseMe
With the struggling economy… there’s a huge supply of properties for rent… Landlords may find themselves hard-pressed to find a reliable tenant.Tamira Gumzburg, Chief Marketing Officer - HouseMe
… in many cases, landlords have granted rental relief or reductions… We’ve seen a lot of negotiations this year… it’s not only ‘take it or leave it’… during this strange time.Tamira Gumzburg, Chief Marketing Officer - HouseMe
Listen to the interview in the audio below.
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