The rent you charge must reflect the condition of your house as well as the state of the property market. Picture: Ivan Samkov/Pexels
High interest rates have driven activity away from homeownership and back towards the rental market, but landlords need to be careful about the rent they charge.
If a property has amenities like a pool, gym, or covered parking, then a higher rental price can be charged, but there has to be a balance between setting a fair rent to help cover the bond and also one that tenants can afford.
The number of tenants in arrears with their rent has increased to its highest level since the end of 2021 as rising inflation and interest rates take their toll on household incomes.
Thus, it is in a landlord’s best interests to attract and retain a reliable tenant that can afford a fair rental price, says Adrian Goslett, regional director and chief executive of RE/MAX of Southern Africa.
“While the demand for rental homes remains high across the country, landlords will still need to secure a reliable tenant to avoid the risk of missed or late payments. If a rental price is set too high, this is likely to deter sensible tenants and could put landlords at risk of signing a lease with a tenant who actually cannot truly afford the rent.”
He reminds landlords that most consumers are feeling pinched by the current economic climate.
“Apart from inflation eating into monthly budgets, any debt payments, such as credit cards or car loans, have become more expensive with every interest rate hike. This leaves possible tenants with less disposal income to spend on things like rent.”
Finding the right rental price is a balance between attracting reliable tenants and maximising your rental income. To get the rental price right, landlords are advised to rely on the advice of a reputable rental agent as, based on their research and comparative market analysis, a competitive rental price can be set.
“This should be in line with the market and the broader economic conditions but should also reflect the unique features and condition of your property.”
These are the aspects of a home that Goslett says will affect its rental price:
1. Location
This is one of the most significant factors affecting rental prices. The higher the demand for an area, the higher the landlord can charge in rent. Properties located near good schools or popular restaurants can typically command higher rents.
2. Size and features
The size and features of your property, such as the number of bedrooms and bathrooms, square meterage, and amenities like a pool, gym, or covered parking, will also affect the rental price.
“Larger homes that have more amenities generally warrant higher rental prices. Keeping an eye on what other rental homes in your area offer should also inform your pricing strategy.”
IOL Business