South Africans Are Having It Tough

Private Property South Africa
Lea Jacobs

According to Mike Schüssler, chief economist at economists.co.za, more than 2.9-million households rent residential property in South Africa. Of these, 1.6-million rent formal structures. At this stage about 700 000 households rent properties in the formal (suburban) market, up from the 675 000 households recorded in 2010.

More than 62 percent of South African households currently own their lodgings, but he says that this percentage has dropped in the past few years and is significantly lower than earlier in the decade when the figure was around the 70 percent mark. It is this, he says, that indicates that more former homeowners are now entering the rental market.

It doesn’t appear to be easy, regardless of which side of the fence you are on and PayProp reports that both landlords and tenants are having it tough at the moment. Tenants are struggling to cope with increasing fuel, electricity and service costs and this is putting pressure on landlords to limit rent increases to below inflation to protect rental income. The report indicates that the nationwide average rental for June was R5 178 which is slightly more than the figure for February which was reflected at R5 172.

One of the factors that is undoubtedly having a major impact on homeowners are the increases in municipal rates. In a recent report that appeared in the Mercury newspaper, a resident of a well-known golfing estate on the North Coast of KwaZulu-Natal is now paying R72 000 per annum opposed to the R11 000 he was paying to the eThekwini municipality six years ago. This equates to an increase of around 500 percent.

Based on so-called market related valuations, municipalities across the country have been slowly putting the squeeze on South African homeowners and this, coupled with the rising costs of electricity and water, are certainly beginning to weigh heavily on the average man in the street.

Government it seems, is caught between a rock and a hard place. Rising costs and corruption have undoubtedly had a severe impact on the amount of money in municipal coffers, but trying to fleece homeowners for every last cent is certainly not the way to go. The situation, which is fast coming to a head, has got to end at some point because the proverbial wheels are going to fall off if government continues to hold homeowners to ransom.

It’s not the only responsibility that government has and Alan Levy, an attorney from Alan Levy Attorneys, recently highlighted sections of the Renting Housing Act which deals with Government's responsibility to promote rental housing.

He says that section two in chapter two specifically states that Government must promote a stable and growing market to meet the demand for affordable rental housing amongst persons historically disadvantaged and poor persons and that it must introduce incentives and mechanisms that:

• Improve conditions in the rental housing market;

• Encourage investment in urban and rural areas that are in need of revitalisation;

• Correct distorted patterns of residential settlement by initiating and facilitating new development in affected areas.

This must be effected and achieved in partnership with the private sector.

Section two goes on to state that Government, when implementing the above, must:

• Optimise the use of existing urban and rural transport infrastructures;

• Inhibit urban fragmentation or sprawl;

• Promote higher residential densities in existing urban areas as well as in areas of new urban growth;

• Mobilise and enhance existing public and private capacity and expertise in the management of rental housing.

Section two and three further provide that National Government must introduce a policy framework to give effect to Government’s obligations in terms of section two, which must also be pursued by Provincial and local Government. Whether Government has the ability or willingness to abide by their own legislation remains to be seen.

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