More homeowners are choosing to let out their property instead of selling. These inexperienced landlords should consult an expert before renting out their homes.
The increased mobility of South Africans in the current tough economic environment is set to turn more private property owners into landlords – and estate agents into property administrators – with potentially damaging results.
“Already we see more homeowners relocating within SA in search of work or taking up off-shore contracts to remain employed,” says Greg Harris, CEO of Chas Everitt Property Rentals, “and we expect this trend to accelerate as SA begins to feel the unpleasant economic effects of its junk status.
“However, because of the time it takes to find buyers at the moment, many of these owners are also opting to hang on to their properties and rent them out until they return – or until the economy improves and the property market becomes more favourable to sellers.”
In response to this, and to the rising demand for rental properties, he says, many estate agencies that have previously been largely geared to property sales are now taking on a property rental and administration role.
“And while there is nothing inherently wrong with that, it often results in two inexperienced parties being involved in an arrangement where specialised knowledge is actually just as important as trust and transparency.
“In any leasing arrangement, there is also potential for dispute between the landlord and the tenant and between the landlord and the agent, and this is of course multiplied if both are not totally aware of what they want or what needs to be done.”
To avoid these risks, Harris says, new landlords should preferably seek out an established and reputable agency with proven expertise in rental property management.
“Secondly, they should make sure they give the agent a clear, written mandate before the property is let – and detail the role that they wish the agent to play. Is it simply to advertise, let the property and collect the rent? Or will the agent also be responsible for checking potential tenants' references and creditworthiness, and for routine maintenance work and regular checks to see that the property is being kept in good repair?
“It is essential that landlords also instruct the agent to take a proper inventory before tenants move in, and on their departure, especially if they are leasing furnished accommodation. The degree of involvement will obviously influence the agent’s commission, and this should also be agreed in advance and noted in the rental mandate.”
Thirdly, he says, new landlords should be very careful when it comes to setting the monthly rental for their property at the right level, and here too, the advice of an experienced rental management agent can be invaluable.
“Good agents will track the effects of economic conditions, interest rates and consumer confidence levels on the demand for rental property, and on achievable rentals in their areas.
“They will also know the value of keeping quality tenants in place and of tailoring rental packages and rental increases to do so.”