Do you have a property you would like to rent out or are you considering buying a property with the view of renting it out? For prospective landlords in the Western Cape the prospects are looking good.
According to the TPN Vacancy Survey of 2022 that measures the number of vacancies (rentals standing empty), the Western Cape is still reflecting its lowest vacancy level since 2016. This means that there is a high demand for rental properties and in 2023, with its steep interest rate hikes, this trend will continue. More people are choosing to rent instead of buying property because they are unable to afford the mortgage.
However - despite the high demand, it is still important that landlords know what the key points are that prospective tenants consider when looking for rental properties to ensure quality tenants and a regular trusted income.
Price and security
Price remains the key consideration for prospective tenants. Therefore, property owners will have to strike a deliberate balance between occupancy and price. If the rental is too high, you either risk not achieving occupancy or could end up with defaulting tenants.
TPN's annual Tenant Survey asked tenants what factors they consider when looking for a rental home in the current market. By far the number one consideration reported was price (57%) followed by security (37%).
The Tenant Survey data clearly indicated that as the rental increases, the price of the rental property becomes less important to tenants. At the same time, the higher the rental bracket, the more important security becomes.
TPN also found that price is paramount in the luxury rental band - above R25 000 a month. Here security ranked as the number one tenant consideration with two-thirds of this affluent market choosing security as their primary concern.
Pets, size and distance
Apart from the rental property being affordable and secure, a pet-friendly property ranked third in importance, especially in the higher rental bracket. In descending order of importance tenants also consider the size of the property and distance from work, according to the survey.
Energy and water resources
Investing in an alternative energy source to help tenants handle the rampant cost of electricity, will elevate the property above the average rental stock in an area. According to the survey there could be a lack of secure and reliable water supply in the future in this country, which will make properties with water resources such as boreholes or water tanks more valuable.
Other nice-to haves
Built-in appliances and stove
Built-in cupboards
Garage and or parking
Wi-Fi
Alarm system
Furnished or not?
While furnished properties can achieve 15 to 20% higher rentals than unfurnished properties, the downside is that furnished properties - in demand with people in transition, or on a work or holiday stay - are seldom rented over the long term. The result is a high turnover of tenants and a higher risk of unoccupied periods. The management, maintenance and replacement costs can also be higher.