Tenants countrywide are shopping for the best deals, and rentals can be even more competitive than sales. This is according to Shaun Groves, Gauteng rentals manager for Lew Geffen Sotheby’s International Realty, who says when someone is buying a home, they envisage themselves living there for many years to come; but when renting that doesn’t necessarily apply.
“If a rental property doesn’t tick the boxes for you at present – for instance, in the right area, close to schools, four bedrooms, or staff quarters – you will move on to the next one,” he says, noting that it’s a far less emotional acquisition than buying a home. “Tenants are more inclined to bargain for better value.
“On the whole, landlords need to become far more tolerant of certain conditions to compete. Allowing pets within reason would be a good example. Investment property owners need to fine tune the value proposition, and be willing to accommodate tenant requirements.”
Gauteng has been experiencing a slump going back as far as Q3 2014, with rentals having increased by just 10% in total, compared with 14% on average for the other eight provinces, according to the PayProp rental index.
“There are probably nodes where rentals have increased by 10%, or even more,” says Groves. “However, in the northern suburbs of Johannesburg this is certainly not the case. At present, the chances of landlords here getting 10% escalations are very small, and most leases are linked to the consumer price index, which is around 6.5%. This is the fairest way to circumvent disagreement between landlords and tenants, and result in both parties feeling they have a good deal.”
PayProp figures pin 32% of the rentals countrywide in the R5,000 to R7,500 price bracket, with the R15,000-plus bracket having increased from 4.95% to 6.2% of rentals.
Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty, quotes the Rode Report for Q4 2016 which showed that the growth in apartment rental rates nationwide was outperforming that of house prices.
“Johannesburg was the best performer here, with rentals showing growth of roughly 7%. This was followed by Cape Town and Pretoria at 6% and Durban at 5%,” he says. “Over the same period, consumer prices – excluding owners’ equivalent rent – showed growth of 7%, so in Johannesburg nominal rentals were able to grow at the inflation rate.”
PayProp figures show that Gauteng tenants are generally required to put down 1.22 times the monthly rental, compared with 1.62 times in the Western Cape.
Top photo: This Sandton penthouse offers open-plan entertainment areas including a double-volume dining room, a family room, two balconies, an upstairs entertainment deck and a private pool, and is for rent for R110,000 a month unfurnished, or R120,000 furnished. Amenities in the building and available to prospective tenants include a concierge, boardroom facilities, fibre connectivity, a restaurant and a gym.