How a rental practitioner helps to optimise investment property

Residential landlords have faced tough conditions over the past three years due to the Covid-19 pandemic and the ongoing economic downturn. So it’s encouraging to note that the most recent PayProp Rental Index reports that rental growth rates have returned to pre-pandemic levels.

“From the fourth quarter in 2021 to the same period in 2022, the average national rent increased by 3.4%,” says PayProp chief executive Michelle Dickens.

Landlords are still under pressure, though, with increasing bond repayments to deal with, along with tenants who are facing their own financial pressures. To help buy-to-let investors navigate the changing rental market in 2023, Dickens says appointing a qualified property professional is essential.

“Professional real estate agents should be able to give owners peace of mind when it comes to understanding market trends, adequately dealing with tenants and making sure that every rand is accounted for,” she says.

Selection

Before deciding on a property practitioner to partner with in your rental investment, take into account the following:

Accreditation – Property professionals are required to be registered with the Property Practitioners Regulatory Authority (PPRA) and must have valid Fidelity Fund Certificates (FFC). If you are in doubt, call the PPRA on 087 285 3222 and ask for confirmation that the agency you intend to do business with is trading with a valid FFC.

Financial management is one of the most important parts of rental property management. Ensure your chosen property practitioner uses an advanced fintech platform linked to the South African banking system and offers modern trust account management. This will provide peace of mind that your funds are managed professionally, safely and with maximum transparency.

Credit checks – Although tenants have the right to decide that you, as a third party, may not see the results of their credit check, you are entitled to ask the agency if a check has been carried out and if their analysis of the report confirms that the applicants will be good tenants. Before appointing an agency, check what their policy is regarding credit checks. Under no circumstances should you sign a lease until the agency has undertaken this check.

Mandate – It’s important to have a detailed mandate of management activities. Ensure the document outlines precisely what the agency may and may not do, the monthly fee, and the payment due date.

Inspections – The Rental Housing Act specifies that ingoing and outgoing inspections are mandatory and must be attended by the landlord or rental agent and the tenants. Find out the agency’s process for conducting these inspections, which should include photographs of the interiors and exteriors of the rental property. Be sure to ask to see a copy of the ingoing inspection report each time new tenants take occupation. This report creates a baseline for the condition of the property at the start of the lease. If no inspection has taken place, at the end of the lease term, you won’t be able to claim for possible damage inflicted by the tenants while they occupied the property.

“Property letting is a highly specialised field that requires the guidance and assistance of an accredited rental agent,” says Dickens.

“A reliable rental agent will keep you abreast of trends in the property rental market, which is continually influenced by political and economic factors. In addition, you should be working with an agency with the systems and resources in place to manage your property professionally.

“Some people may try to avoid employing an estate agent to save on commission costs, but a qualified agent with experience in the rental market can help you optimise your investment.”

Find a rental agent here.

Writer: Sarah-Jane Meyer