Letting agent saves the day for happy client

Watch this video to see how Annemarie Stander, a rental agent at Terblanche Properties in the Garden Route, assisted a client in urgent need of a rental property.

Rental market looking stable

Rental payments must be managed

First quarter 2011 results released by TPN shows that 81% of tenants are in good standing with their rental payments. A tenant is in good standing when the tenant pays the full amount of the rental either on time or a few days late. Comparatively speaking, tenants are paying better in 2011 Q1 than the same period last year when only 78% of tenants were in good standing.

While it may be too soon to draw major conclusions from the data, it does seem as if tenants have learnt to budget better. The stable inflation rate environment and low interest rates may also be playing a role. South Africans have had to tighten their belts, and it seems we have done so.

The rental bracket between R3000 per month to R7000 per month still proves to have the best paying tenants with a full 84 of them in good standing. The bracket between R7000 and R12 000 follows closely with 82% of tenants in good standing. Tenants in the categories below R3000 and above R12 000 per month have further deteriorated to 75% and 74% respectively. Tenants in the Western and Eastern Cape continue to pay better than those in Kwazulu Natal and Gauteng.

We have always felt that the choice of letting agency is just as important as the choice of tenant. Make sure that you deal with a company with a proven track record and a valid fidelity fund certificate. As one of the leading letting agencies in the Garden Route, it is great to know that tenants placed by Terblanche Total Property Solutions are paying far better than the national averages. More than 98% of tenants placed by us are currently in good standing.

Wouldn’t you like to have those kind of statistics in your favour?

Rental property tax deductions

Ralf Metz’s book, Paying Less Tax Made Simple 2011, advises that SARS only allows you to claim the following deductions against your rental income:

• “The interest on your mortgage bond or loan raised against the property;
• Rates and taxes;
• Insurance;
• Repairs and maintenance costs – provided the property is in a lettable condition to start with and you entered into a lease agreement which requires you to make the repairs;
• Expenses incurred on the treatment of any timber against attack by beetles;
• Advertising;
• The cost of commission and rent collections;
• Electricity and water; and
• Depreciation of furniture if the property is let fully furnished.”

The cost of improvements, reconstructions or additions to the property cannot be deducted as these expenses are of a capital nature, says Metz. Neither will a deduction be allowed for repairs, says Metz, if you repair a property which was previously let and which you now want to occupy and sell. To get a deduction you will need to make the repairs while your property is being occupied for trade, adds Metz.

Also worth noting is that there is a very fine line of distinction between repairs and maintenance on the one hand and improvement and reconstruction on the other. Each case will be assessed on its merits.

*Based on a Moneyweb article

Decorating for tenants

Renting out an apartment is a great way to ease the bond burden, particularly in these tough economic times. But choosing exactly how to decorate the apartment is critical. Bad judgement in the decorating scheme could easily see prospective tenants heading for the door. This is according to Caroline Coates, marketing manager of Upper Eastside in Woodstock.

She says that of the 225 apartments that form part of the R420-million Upper Eastside venture, seventy-five percent were buy-to-rent. “In addition to factors such as a convenient location, security, parking and great amenities; a well-decorated and maintained property is more likely to attract tenants and ensure regular rentals.”

Coates suggests setting a budget and time frame. “Consider whether it will be cheaper to do some of the work yourself or more cost effective and less stressful to employ a contractor. When deciding on a style, it’s important to think practically rather than personally. Aim to create a blank canvas where a tenant can imagine their belongings.”

According to Coates tenants generally look for a space that is clean, functional and modern. “Both the flooring and paint needs to be durable and easy to clean. Use wood, tiles, laminate or vinyl for flooring and high-quality acrylic paint for walls and ceilings. Plain and simple colours are easy to re-fill or touch up.”

While furnishing your rental property is not essential — unless it’s for short-term or holiday rentals — Coates believes that doing so could increase your rental income. “Supplying a stove, washing machine and fridge makes the space more attractive to tenants. Look for functional, hard-wearing items that would suit different needs like, say, a dining room table that could be used for entertaining by a young professional as well as a desk for someone working from home.”

“First impressions count so don’t forget about the exterior of the property. Maintain paint-work, windows and lighting. Rather than relying on the tenant or a service to care for your garden, choose low-maintenance options such as succulents in pots, stones and paving.”

Top five decor tips for buying-to-rent:

• Compile an inventory to help you keep track of the condition of your property and its contents.
• Paint is easier to maintain than wallpaper.
• Take expert advice on which paint to use — kitchens and bathrooms need mould and water resistant paint.
• Make a note of the name and brand of paint for touch-ups.
• Patterned carpets hide stains.

Renting 101

Kabous le Roux authored a good article on the basics of renting. We recommend all would-be tenants and landlords to educate themselves on the basics of property letting to ensure they know their respective rights and obligations.

A good agent will be able to provide indispensable advice and assistance in this regard. The agent should assist both landlord and owner with all the legal, practical and financial matters that are relevant to a lease agreement. This includes everything from the marketing of the property, showing the property to prospective tenants, doing the necessary credit and reference checks on a prospective tenant, getting a deposit from the tenant, getting the landlord and tenant to conclude a fair lease agreement, doing the necessary inspections, looking after property, taking care of tenants’ requests, collecting the rent etc. More than ever, it’s important to deal with professional and reputable agents.

The article can be see here.

Another piece of the Pie (Act)

Apologies for the late blog post this week. As I’m writing this, I am sitting in my office on this sunny Sunday morning here in Mossel Bay. We were driven from our offices this week due to building and renovations work. I am not complaning – at a time when many smaller real estate companies are closing, we’re actually renovating and expanding.

A few months ago I posted a blog entry about the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act (Pie) and planned amendements thereto that were being tabled before Parliament. Some of these amendments have now become available for comment. It seems that it brings – as always – a mix of good news and bad news for landlords. The article below were first posted on Property 24 and looks at these amendments in more detail.

“Amendments to the Prevention of Illegal Eviction from and Unlawful Occupation of Land (Pie) Act now tabled in parliament will bring relief to tenants, sectional title owners and landlords. This is according to Andrew Schaefer, CEO of national rental agents Trafalgar.

Its most dramatic provisions are to criminalise the hijacking of property rentals – common in the inner city and “constructive eviction” by landlords. It also corrects an unintended appeal court judgement seven years ago that included tenants in the protection of land invaders by the Pie Act.

“Landlords are unhappy because they say the terms of the proposed amendment could see them jailed if their tenant electricity was cut off for any reason,” says Schaefer. “Yet it doesn’t criminalise tenants refusing to pay rent.

“I think some of the terms of the bill now in Parliament might be softened. But landlords should start getting used to the idea that their relationship with the occupants of their residential properties is as much social as economic.

“I believe government is sincere in wanting to balance the rights of tenants with its reliance on private enterprise to provide large scale rental housing that it can’t afford to do itself,” add Schaefer, citing the current Rental Housing Act. “Amendments to that also include constructive eviction – that is making tenants life so miserable they are forced to leave — as a criminal act.
It will definitely curtail new rental development in its current form, he says, “just as the hijacking of flats in various ways has been a major cause of the rental fabric in Johannesburg CBD deteriorating so badly.” People have moved into buildings claiming that landlord or managing agents are corrupt and diverting rents to themselves. Landlords have been unable to pay for their electricity and water and the tenants have ultimately suffered the most.

Section 2 of the act will now be amended to make it easier to evict building tenants and homeowners who default on their mortgage loans. But although landlords will be freed from the Pie Act they must still go through procedures that will prevent rapid evictions, including getting a court order and giving 10 days’ notice of the court date. The constitution prohibits evictions without a court order.

Changes to section 3 criminalises people who charge rent or get money from tenants or sectional title owners for land or buildings without the consent of landlords or bodies corporate. They face up to two years in prison and the seizure of their assets.

Until now police have refused to act against the hijackers. They usually claim to be acting for a fictitious political grouping sent to take over the building because, they say, that the landlord is corrupt. Rents or levies illegally collected are then diverted to a bank account.

Police say this is a civil matter. Now many of Johannesburg’s 1 000 dilapidated inner-city buildings will be freed for regeneration. Authorities will also be able to put more pressure on the neglectful owners of remaining buildings.Section 3 criminalises constructive eviction, defined as depriving tenants of services or facilities “to induce a person to vacate or return land or buildings”. If they are accused of this, landlords also face criminal charges.”

An introduction to lease agreements

There could be many reasons why people decide not to own their own properties. For instance, many people simply cannot afford the monthly bond repayments, maintenance and other costs associated with ownership. For them, renting a house makes a lot of sense. One can often rent a better and bigger property than you can afford to buy. Other people move around a lot for work and need some flexibility.

If you decide to rent, you will probably be required to sign a lease agreement. The lease agreement is simply the contract that governs the relationship between the landlord (the lessor) and the person renting the property (the lessee) in which the landlord gives temporary use and enjoyment of the property to the tenant in return for the rental payment(s). There are usually a number of other clauses in the lease agreement also that set out the respective rights and obligations of the landlord and tenant.

The Rental Housing Act of 1999 applies to lease agreements concluded in South Africa. In accordance with the Constitution of South Africa, this Act essentially prohibits discrimination on any grounds when considering a potential tenant. The Act also applies to the advertisement placed by a landlord. The landlord may not advertise “men only”, “no lesbians”, “professionals preferred”, or “no children” etc. Any discrimination on the grounds of race, gender, marital status, age, religion, disability etc, will be illegal.

A lease agreement may be a verbal agreement, but, as stated above, it is better to commit your agreement to writing. The lessee may request a written agreement from the landlord. The written agreement must contain the following clauses:

• The full names and addresses of both landlord and tenant;
• A proper description of the property that is leased;
• The rental amount and escalation, if any, thereof;
• The frequency of the rental payments (weekly, monthly, annually etc.);
• The duration of the lease;
• A termination clause, which must include the notice period required to terminate the lease agreement;
• Obligations of both the landlord and tenant;
• Other charges payable by the tenant over and above the rental such as water, electricity, satellite TV etc., if any.

If the property is situated in a sectional title scheme, we recommend you include the rules of that scheme in the lease agreement. This saves landlords a lot of headaches later. It is also a good idea to include a list of all defects to the property so that there are no disputes about responsibility at the end of the lease. Furniture should be listed in an inventory.

At Terblanche Thomas we assist both landlords and tenants in the Garden Route (and the rest of SA) with all the complexities of lease agreements. Talk to us if you want to make sure that you’ve covered all the bases.

The importance of screening tenants

One of the most important things a property owner must try and achieve is to find the right tenants for his property. Let me say that in a different way. As a property owner your biggest challenge will not just be to find tenants but to find the RIGHT tenants for your property. See, many property investors do not spend the necessary time and effort to make sure the people they put into their properties are the kind of people who will hand that property back in the same state at the end of the contract.

The screening of potential tenants is a crucial step in the buy-to-let process. You absolutely have to run background checks on potential tenants, check and confirm their references, do credit record checks on them and scrutinise all information provided by them very carefully. See, the letting business is ultimately a people business and you must never forget that you are dealing with people. Listen to them when you interview or screen them. What they say to you will indicate whether they are stable or not, at what stage of their lives they are in, whether they plan to pay or move from house to house like professional squatters. Listen to what their employers say about them when you check their employment status.

A thorough screening process will identify the bad apples. Of course there are no absolute truths in life but it helps to do your homework thoroughly. A professional and reputable company like Terblanche Thomas Property Solutions can be of immense value to you in this regard. As a rule, you should not rent anything to anyone who has not been through a criminal and credit check. You should also do proper background checks on all your tenants. If your potential tenants are a married couple or living together, do these checks on both of them.

Screening removes the bad apples! Talk to us if you want to make sure you get the right people in your property.