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Pretoria landlords may battle to increase rentals again this year

Centurion Pretoria

The residential rental market in Pretoria is in disarray as mounting negative pressure arising from substantial oversupply of stock and a diminishing population forces landlords to reduce rentals by up to 10%, for the third consecutive year.

Marnus Maritz, Rent-a-prop multiple franchise holder and property investor, says large-scale developers that launched mammoth townhouse and cluster projects in the western suburbs some years ago are still bringing units onto the market, further exacerbating oversupply.

“Big developers have to maintain turnover while smaller, more nimble developers are able to hold back projects until markets improve,” he says. “New units are offered for sale and those that are not bought are placed onto the rental market. At least one big developer will soon be adding a further 1,000 units to the market.”

Piling on the benefits

He says some landlords are offering “first-month-free”, zero deposits to approved clients and no escalation. They are keen to keep good tenants in place because if a tenant moves out the landlord is unlikely to find a new tenant at the same rental.

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“A two-bedroom, two-bathroom townhouse west of Centurion that would have attracted a rental of R8,500 two years ago is currently being rented out at R6,800. Tenants are being extremely picky and they’re not prepared to pay. About 90% of apartments, townhouses and clusters are in the rental bracket between R7,000 and R15,000 a month. Even luxury freehold properties in the western suburbs are not exempt from the rental squeeze. A house on a 4,500m² stand in Centurion, that should be a R35,000 a month rental, is likely to go for less than R30,000 a month.”

A squeeze on the old dameswaterkloof

Maritz qualifies his remarks about the Pretoria market in general by observing that rental levels are strong in older, established suburbs such as Waterkloof. He speculates that even in those suburbs rents are unlikely to rise in 2019.

“I feel sorry for owners who have to deal with rising costs such as levies, power and water but are getting lower rents. They are facing a double blow because property appreciation has fallen away drastically. In addition, those owners who do not maintain their properties during the rental period are likely to lose their tenants.

“A few larger agencies that specialise in property sales extended their operations into rental stock a few years ago. But with the depressed market and the challenge of finding and retaining tenants, while keeping landlords happy, some of these agencies are selling their rental books to specialist rental businesses such as ours. In the case of poor payers, some of these larger agencies do not have the correct systems in place to manage the issue.”

He mentions that the current tough rental market conditions in Pretoria has motivated Rent-a-prop to retrain staff to ensure employees do not become demotivated.

“Our approach when renting a property is to persuade tenants to sign a lease for one year with an option to renew. We undertake inspections on a regular basis to ensure that the rental property is well maintained. Landlors have to bend over backwards to ensure their clients are satisfied, otherwise they will lose the tenant.”

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Maritz says that despite the state of the rental market, Rent-a-prop has very few problems with late payments or defaults. The company scrutinises tenants rigorously through available portals to weed out potential problem clients.

“I believe the market is likely to stabilise first in the older, established suburbs some time in 2019. It is unfortunate that a lot of people feel negative about the future of the country and that has translated into significant numbers of vacant homes being available. One can only speculate about an upturn.”

Words: Blake Wilkins


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