Helen Hoekstra, general manager of the Knight Frank Anne Porter Atlantic Seaboard office has said that the long term rentals in the areas which they serve are much in demand, so much so that they are experiencing a shortage of stock.
The types of units that are in demand are mostly one and two bedroom units, she said. It is difficult, if not impossible in the current market to get a bachelor or one bedroom apartment for R5 000 per month and two bedroom apartments are renting out at a minimum of around R8 500 to R9 000.
When asked about possible rentals in higher price brackets “Most people shop according to what they can afford and if the unit’s rental is high, most cannot increase the amount they pay toward rent each month. Investors who buy-to-let should be aware of this and when working out the rental they will be charging for their unit, must stick closely to a market related rental and should be careful not to out-price their unit,” said Hoekstra.
“Over the last year, which has been a very difficult financially for most people, we at Knight Frank Anne Porter have tried to keep rental increases to a minimum, aiming rather to keep a good tenant who pays well, than to increase the rent and find that tenant moving out because he no longer can afford to live in the unit,” she said.
The demand for units to rent on the Atlantic Seaboard seems to be higher than supply at the moment, said Hoekstra, and “if we had more units to rent out we would probably have no problem in finding tenants to rent these units”.
“We find there are many young couples and young professionals looking to rent in this area because of its convenient position in relation to the CBD, major freeways, quick access to the airport and the many retail centres,” she said.
The typical units that Knight Frank Anne Porter’s office has to rent are apartments, and when asked to give an example, Hoekstra mentioned a two bedroom, one bathroom apartment in Sea Point at R5 000 per month with on-street parking.
Although parking in this area is at a premium, the units are usually in demand because of the close proximity to the promenade, the easy walk to many shops, restaurants and coffee shops, gyms, the park and easy access to town (against the main flow of traffic). Sea Point is also quite sheltered from the wind, she said, which is an important factor in many Capetonians’ lives.
TPN’s Rental Payment Monitor report for Q1 in 2013 shows that tenant behaviour has improved, with tenants in good standing increasing to 84%. These are tenants who have paid on time and paid late (but did pay eventually).
The best payment categories for rentals, according to the report, are the R3 000 to R7 000 and R7 000 to R12 000 categories, but the Knight Frank rental demand is at its highest in the R3 000 to R7 000 category, said Hoekstra. Another important thing to note is that Western Cape is in the highest (at 88%) bracket of tenants in good standing, alongside Mpumalanga and Eastern Cape, but has the highest percentage of the three provinces that pay on time (78%), which reflects quality tenants.
“The TPN report shows that, overall, Q1 saw tenants’ rental behaviour improving, across all price brackets and in all South African regions, which bodes well for the buy to let market.”