Landlords should not be 'too greedy'
Category Property News
Landlords may be tempted to hike the rent given the increase in the cost of living and maintenance, but how much of an increase is acceptable in today's market?
"For some time now, Tony Clarke, Managing Director of the Rawson Property Group, has advised landlords renting out their properties to shun being "too greedy" and to limit their annual rent rises so that in general they do not far exceed the inflation rate.
This advice still remains valid, says Clarke, especially if landlords have found themselves a reliable tenant.
"Far too often we have seen greedy landlords lose good tenants by insisting on a 10% or 12% annual rise in the rent.
"Often when this happens the actual increase in income is quite small. For example, on a small unit where the tenant pays R5 000 per month, it is almost certainly not worth losing a good tenant for a rise of R500 rather than say R300 or R350.”
He says the exception to this rule could be those high demand areas close to South Africa’s universities and tertiary educational institutions. Here demand is now so strong that landlords are often in control and have been able to increase rents year on year by significant sums.
The Rawson Property Group’s specialist team, which is headed up by John Birkett and which operates from the Claremont franchise, has for some years now focused on rental accommodation in the Observatory to Kenilworth suburbs of the Cape Peninsula. "This team is now reporting that many landlords have been able this year to achieve rent rises of 10 to 20%," says Clarke. "What is more, they say, that as February (when UCT goes into its first term) approaches, the rent rises tend to go higher still as stock runs short. Most Rawson managed rental properties in the academic belt will probably be fully tenanted well before Christmas.”
Just how high the rents on the better ‘academic belt’ accommodation can be these days, he says is shown by the fact that a two bedroom apartment rented out by Rawson Claremont has been signed up at R13 000 per month and another (which has a few luxury extras in it) is on the market at R20 000 per month. Even in the less chic units, some of which are over 50 years old, students can pay as much as R4 500 per month for a single bedroom.
Nevertheless, the advice about exercising restraint on increases remains right for the vast majority of rented accommodation now available in South Africa – especially in view of the fact that South African middle class tenants are in general having to adopt austerity measures, says Clarke.
Author: Property 24