Gauteng landlords have ‘unrealistic expectations’
There are currently many reports of vacant rental homes and units around Gauteng – and the main reason for this is that “landlords are unrealistic in their price expectations”.
This is according to Seeff’s licensees in the province who, in most of the major metros, agree that the rental market in Gauteng is extremely competitive and if a rental property is not priced correctly, it will in all likelihood remain vacant.
Charles Vining, Seeff’s MD in Sandton, says in this affluent area agents are increasingly experiencing greater negotiation on price (about a 10% reduction) when finalising a lease. Lower rentals priced at below R12 000 per month are not negotiated much, but higher value rentals are significantly negotiated.
“Economic pressure is the overwhelming factor and tenants are budgeting carefully, saving 10% per month can make a big difference at the end of a 12-month period.
Rentals between R7 000 and R12 000 per month are in high demand in Sandton and Fourways, and in the Midrand suburbs the R6 000 to R9 000 per month price band is most in demand”.
Vining says there is a lot of rental stock available in Sandton and surrounds and landlords who are unwilling to negotiate on price or inclusions are holding vacant units.
PG van der Linde, Seeff’s Rental Manager in Pretoria East, says rental rates here have declined in the first quarter of 2018 by about 8% to 12.5%.
“Tenants here have many options with the current supply of rental property and properties need to be very competitively priced to avoid vacancies, hence the drop in rental rates.
Seeff Pretoria East has experienced a rise in demand for rental property in the first four months of 2018. Tenants have better cash flow when renting, which is a win in the current financial environment. Rental properties currently offer more value when comparing what you can rent for your rand versus what you can buy for your rand”.
Van der Linde says the most active price band across the board in Pretoria East is for properties priced between R6 500 and R 8 500 per month.
Tracy Pugin, Rentals Licensee in Randburg, says rental rates here are equally under pressure and are down by about 20%, if not more.
“Rental demand in Randburg has decreased because affordability is a problem and tenants don’t meet credit criteria. We are also experiencing many renewal leases as opposed to new placements.
"Interestingly, the more expensive properties priced between R15 000 and R25 000 per month are the most active rental range, while properties priced around R7 000 per month take a while before they are rented out”.
Pugin says landlords in Randburg are demanding higher rental prices due to rates and levy increases, but that tenants can’t afford these increases and then rather give notice.
In Centurion, however, the rental market is very strong across all bands with both private and corporate rentals, says Steve van Wyk, Seeff’s MD here.
“The most popular price range is from R5 000 to about R8 000 for a one or two bedroomed apartment. However, in this price range a number of developers have built multi storeyed blocks of apartments, and to get the units let, they are offering huge discounts and various incentives.
Outside of this price range rentals are also strong and increases average out at about 5.5%. There has been a big demand for rental accommodation as it has become more difficult to qualify for a bond.
It would appear that owning a number of properties is to let still a viable investment alternative as returns are still around 8 to 9% before expenses”.
In Braamfontein, a shortage of student accommodation has resulted in an almost unprecedented demand for student rentals and the biggest demand is for property priced between R7 000 and R9 000 per month. In fact, 95% of the enquiries that Seeff receives are for student accommodation, says Byron Cornish, a Seeff licensee in the Joburg CBD.
“Generally, bachelor units are priced from R6 000 per month, one bedroom apartments from R7 500 per month and two bedrooms from R8 500.The high demand for tenants and high rentals create a huge opportunity for investors and yields of over 10%”.
Johannesburg South
In Johannesburg South, rental demand is high at the right price and the range most sought after is between R6 000 and R10 000 per month, various Seeff licensees agree.
Lydenburg and Middelburg
Mining towns like Lydenburg and Middelburg are experiencing severe stock shortages in rental property mostly due to uncertainty in the mining sector and as a result investors are unwilling to develop in these areas.