Estate Agency Boss Issues Warning to Landlords

Landlords Beware

The CEO of RealNet Property Group, Tjaart van der Walt has warned that landlords looking to increase rentals could land in financial trouble. The current market has seen rental accommodation in strong demand, which has consequently placed landlords in a stronger position than in previous years.

There is anecdotal evidence however, that tenants are showing increasing resistance to the rapidly escalating rentals and that landlords should carefully consider the benefits of a long-term relationship with reliable tenants before pushing up the rental.

If landlords continue to hike the rent unreasonably, the reality is that tenants with good credit records will have no problem whatsoever finding alternative accommodation. While the tenant has to then go through the inconvenience of sourcing another unit and moving out, the landlord will be left with the prospect of finding a new tenant that may or may not be as reliable in paying the monthly rental.

Van der Walt goes on to say that landlords should keep in mind the costs involved in sourcing new tenants. For instance, costs may include advertising, cleaning, repairing and perhaps even repainting the property. A second consideration is that there will be no rental income while the property is being prepared for new tenants and even at an increased monthly rental for the new tenant, it will take a good deal of time before the lost income is made up.

There is a third factor that might prove worrying is the danger of vandalism when properties stand empty and the cost of temporary security measures should be considered. In short, van der Walt suggests that landlords are likely to find that once all the costs are added up, they might well have been better off had they given their initial trustworthy tenants a break.

The information in this article is courtesy of Tjaart van der Walt (“Tenants resist rising rentals – estate agency boss”, Realestateweb, 13 September 2008).

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