VACANT | TO LET | HOW TO LET YOUR INVESTMENT PROPERTY
Category Advice
Anyone who has glanced over South Africa's written or online media in recent weeks will have seen the doom and gloom occupying the headlines across these platforms. Of relevance to the property industry is the news of the struggling economy and its effect on our citizen's income, which has a direct effect on affordability in terms of rental. In the Western Cape specifically, this negative effect on people's income has resulted in many residential tenants having to negotiate reduced rentals or vacate their leased premises to look for more affordable options.
With many residential investment units in the City Bowl and Atlantic Seaboard nodes especially, having been purchased for short-term letting, the ban on travel into South Africa had a detrimental effect on this particular market given that demand literally halted. As a result, owners of these units changed from short to long-term leases, flooding the long-term letting market in these nodes especially. This drastic increase in supply coupled with many existing tenants in these areas experiencing financial stress has resulted in a marked increase in vacancies. The latest Rode Report (2020:3) states that Cape Town's vacancy rate for flats (both standard and upmarket combined) is 16.7%, drastically up from 7.2% in quarter 1 of this year. We at Steer & Co are not immune to such vacancies and are also experiencing increased vacancies across our managed portfolio, although not at these levels. We have used a pro-active approach to this challenge by engaging with tenants and landlords in trying to reach a workable solution to meet tenants' adjusted affordability and landlords' need to cover ever-increasing expenses. The equilibrium representing what is becoming current market rental norms.
At Steer & Co we have been privy to many such negotiations since late March 2020 when the Covid-19 pandemic hit our shores in an aggressive way. We have spent the last few months handling unprecedented levels of correspondence from tenants who are in the unfortunate position of having lost at least part (sometimes all) of their livelihood, which has translated into an inability to pay their full contracted rental. In many situations, landlords have adjusted the rental downwards where tenants have supported their claims with appropriate documentation.
In addition to rental negotiations we have also engaged with landlords to advertise vacant properties at newly adjusted (often downwards) rentals in nodes where market rentals have changed in the last few months. These lower rentals are not warranted in all Cape Town suburbs, where we've seen rental levels in many of the Northern Suburbs nodes hold, although not increase by escalation rates that we've seen in recent years. The Northern Suburbs remains good value for money in terms of rental accommodation and has proven popular amongst tenants with adjusted income and work circumstances.
We continue to advertise our vacant properties across online platforms such as Property24, www.steer.co.za, Facebook etc with emphasis on advertising these properties at competitive rental rates. Please contact us today if you're in the market for rental accommodation. We recommend getting out there and viewing the spots with potential and then engaging with us regarding agreeable rental terms.
This is a changing market, which presents opportunities for tenants to find their perfect new home, which in many cases has become their work environment too. Let us help you find your perfect fit!
Author: Nina Vass