Figures confirm swing to buy-to-let investing

Private Property South Africa
Rawson Property Group

Figures from the Rawson Property Group’s sale franchises confirm clearly that an expected increase in buy-to-let investors in residential property is taking place.

“The number of buyers now buying for investment purposes has more than doubled in one year – from 3.5% to 8% of the total,” says Bill Rawson, Chairman of the Rawson Property Group, “and there are clear indications that this trend is on the increase”.

Asked to what he attributes this rise, Rawson says that there appear to be three main causes.

The first, in his view, is the poor returns that are now being given by the money market.

“Fixed deposit investments, the traditional haven for the unsophisticated investor, are now around 5.5%. This is not high enough to attract investors.”

The second cause of the upswing, says Rawson, is the greatly improved rents that are now obtainable. This is most noticeable right now in Gauteng, where rental returns of 7% to 10% are being achieved from the date of purchase.

Those going the buy-to-rent route, says Rawson, should follow the example of certain of the Rawson Property Group’s long-established investors and make it a policy to pay back the bond at 10% or 20% above the agreed rate.

And lastly, he says, certain banks last year kept their bond repayments at the old 10.5% rate of a year ago after the standard rate had dropped to 8,5% – and had thereby done their clients a huge favour.

Such clients are building up a surplus which could be a very useful buffer if they hit hard times. If they simply continue to pay their bonds at the higher rate, it will enable them to pay them off in a far shorter period.

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