Buy-to-let hotspots for investors in KZNs rental market
Category Principal's Message
The demand for residential property to let in various conveniently situated hubs around KwaZula-Natal continues unabated, particularly among younger, career-minded buyers who may not yet have access to sufficient capital and credit in order to put down a deposit and acquire their own homes.
As a result, while generally the rental market is experiencing buoyant activity across all price bands, it is the lower to middle price bracket which is seeing the highest demand for rental property, providing incentive for buy-to-let investors seeking to purchase suitably located properties with the potential for sound monthly income streams.
The average rental in South Africa during the second quarter of 2016 was R6 570.50, reflecting a 6.4% increase on the second quarter of last year. Rental inflation rate was therefore unchanged from the first quarter, showing stabilisation after dropping sharply from 7.4% in the final quarter of 2015.
In comparison the average rental in KZN was R6 952, which shows a 6.5% increase from year earlier levels. This is the third highest regional rental in South Africa, after the Northern and Western Cape.
For the investor/landlord, areas such as Umhlanga and La Lucia on the North Coast offer good capital appreciation over the long term and stable returns. There is also always demand from tenants for these areas, as tenants generally seek secure, complex or apartment living and both these areas offer a lot of sectional title opportunities.
For example, a one bedroom unit in Gateway that costs R750 000 will fetch a return of R6 000 to R7 000 per month, which means that the apartment will almost pay for itself. A three bedroom, two bathroom simplex in La Lucia in a secure complex will rent for approximately R20 000 per month (property value being around R3.5 million). On average, a unit in Umhlanga will attract approximately an 8% annual return.
In Pietermaritzburg, gated estates are in demand and pushing rentals up, says Barbara Becker, Pam Golding Properties area principal in the Pietermaritzburg and KZN Midlands areas. Generally we are still finding that flats, houses and especially security complexes in the north of the city are still attracting higher rentals than the south, following a similar trend to selling prices.
When renting out property bear in mind that the first step is to enlist the services of a reputable and qualified rental estate agency to obtain advice on the correct amount to charge as a rental, while contracts need to be CPA compliant.
It is far better to use an Estate Agent because there are a lot of legal requirements that govern leases, and hence, without the correct knowledge and information, the landlord may expose him/herself to risk.
The demand for residential property to let in various conveniently situated hubs around KwaZula-Natal continues unabated, particularly among younger, career-minded buyers who may not yet have access to sufficient capital and credit in order to put down a deposit and acquire their own homes.
As a result, while generally the rental market is experiencing buoyant activity across all price bands, it is the lower to middle price bracket which is seeing the highest demand for rental property, providing incentive for buy-to-let investors seeking to purchase suitably located properties with the potential for sound monthly income streams.
The average rental in South Africa during the second quarter of 2016 was R6 570.50, reflecting a 6.4% increase on the second quarter of last year. Rental inflation rate was therefore unchanged from the first quarter, showing stabilisation after dropping sharply from 7.4% in the final quarter of 2015.
In comparison the average rental in KZN was R6 952, which shows a 6.5% increase from year earlier levels. This is the third highest regional rental in South Africa, after the Northern and Western Cape.
For the investor/landlord, areas such as Umhlanga and La Lucia on the North Coast offer good capital appreciation over the long term and stable returns. There is also always demand from tenants for these areas, as tenants generally seek secure, complex or apartment living and both these areas offer a lot of sectional title opportunities.
For example, a one bedroom unit in Gateway that costs R750 000 will fetch a return of R6 000 to R7 000 per month, which means that the apartment will almost pay for itself. A three bedroom, two bathroom simplex in La Lucia in a secure complex will rent for approximately R20 000 per month (property value being around R3.5 million). On average, a unit in Umhlanga will attract approximately an 8% annual return.
In Pietermaritzburg, gated estates are in demand and pushing rentals up, says Barbara Becker, Pam Golding Properties area principal in the Pietermaritzburg and KZN Midlands areas. Generally we are still finding that flats, houses and especially security complexes in the north of the city are still attracting higher rentals than the south, following a similar trend to selling prices.
When renting out property bear in mind that the first step is to enlist the services of a reputable and qualified rental estate agency to obtain advice on the correct amount to charge as a rental, while contracts need to be CPA compliant.
It is far better to use an Estate Agent because there are a lot of legal requirements that govern leases, and hence, without the correct knowledge and information, the landlord may expose him/herself to risk.
Author: Property 24
