Low vacancies spell good news for landlords in South Africa

If you're dreaming of becoming a landlord or expanding your rental portfolio, this is the time to strike. South Africa's market is booming as demand outstrips the supply of rental properties. There are plenty of opportunities available if you have the know-how and ability to capitalise on the trend. Get to know more about the current market and ways to make a smart buy-to-let investment. 

Rental property trends for savvy investors

According to TPN's Vacancy Survey Report for the first quarter of 2024, national rental vacancies are at historic lows. High interest rates, poor employment, stifled salary growth, and economic uncertainty have made consumers more wary of buying property. The country has just emerged from a challenging election period that has likely added to consumer caution and a preference for the security of rental properties. 

The positive note for landlords is that the rental market has experienced a low vacancy rate as tenants remain rooted in light of their circumstances. The country has also experienced positive rental growth. PayProp shows that while rental growth fell to just 1.2% in Q1 2024 in Mpumalanga, the province experienced above-average growth in 2023, achieving 6.1% in Q4. Historically, this will give buy-to-let investors courage as they make their investments. 

Pricing is a major factor drawing people to renting. However, TPN also reports the flexibility to move and enjoying a more affordable lifestyle as part of the primary reasons for a desire towards tenantship. 

On the property hunt, tenants are attracted to rentals with lease flexibility. This is preferred over amenities such as collaborative working spaces, communal gardens, and facilities. TPN's report also finds that 42% of tenants don't have a specific property type preference as long as the property addresses their feature preferences. Overall, free-standing homes are the preferred option for 20.2% of tenants, followed by sectional title flats and townhouses (both 19%). 

Those looking to invest should keep in mind a tenant's selection criteria. TPN finds that price and security, followed by property size and space, are most sought-after by prospective renters. Having competitive rental pricing, putting in good security measures, and investing in properties that are spacious and well-designed will ensure landlords and buy-to-let investors find success. 

Finally, TPN also reveals the biggest challenge facing tenants is not rental payments, but dealing with repairs and property maintenance issues. Buy-to-let investors should consider properties in good shape and have a reserve fund in place to make repairs in the future. Besides ensuring their properties retain good tenants, this will help when motivating for future increases in rental pricing.

Tips for navigating the market

The current market conditions offer a golden opportunity to maximise returns and build a thriving rental portfolio. Here are some tips to keep in mind:

• Choose a prime location: This will influence your returns and also retain your property's value in the instance that you sell at a later stage. Prioritise properties that are spacious, close to amenities, and within safe neighbourhoods.
   
• Consider property types: Understanding your target market will give you insights into properties they wish to rent. Sectional titles are typically popular options and helpful for landlords when it comes to upkeep and maintenance. 
   
• Price your property correctly: In this way, you can attract tenants and also ensure they aren't tempted to find alternative accommodation that is within their budget.
   
• Buy rental insurance: This will protect you against the risk of tenant defaults, such as breach of the lease agreement, illegal tenants, failure to pay rent, and the concurrent expenses of obtaining an eviction order.
   
• Nail down the rental agreement: Both you and your prospective tenant should agree to terms related to the lease duration, the rental amount, payment terms, and conditions of use of the property. While the rental market is bustling, current economic conditions can create challenges for tenants and you should be prepared to protect your business. 
   
• Sign up for property management: These rental services will help attend to tenant requests, protect your asset, and help you maximise your investment returns. It's also helpful if you don't live nearby and need someone to deal with issues on-site as they occur. 

Ditch the stress, rent with success

As property experts in Mbombela (Nelspruit), Kellaprince Properties provides rental services that will help you take advantage of the property market. 

Our full-service rental management (priced at 10% + VAT monthly commission of the rental amount) will give you peace of mind. The service features include the following:

• Tenant credit and affordability check via TPN
• Comprehensive RedRabbit inspection
• Full-service monthly property management which includes:
  • Monthly statements to tenants
  • Annual statements to landlords
  • Rental collections
  • Full landlord audit reports
  • Trust account audits
  • Utilities management on behalf of landlords
  • Repairs and maintenance management on behalf of landlords/tenants

If you'd prefer to manage the rental yourself, you can opt for our procurement rental, which is priced at the cost of the first month's rent + VAT. This service includes:

• Once-off tenant placement
• Tenant credit and affordability check via TPN
• Comprehensive RedRabbit inspection

Get in touch with our team to find out which property management service works best for your needs.