Flexibility In Renting Rather Than Buying
Category Market Insight
Despite an increase in the interest rate in November 2022, the rental market continues to grow. The growing costs of living, economic uncertainty, and continued loadshedding have impacted the property market. After the COVID pandemic, the property market experienced a significant slump and with the current financial constraints property seekers are once again being placed between a rock and a hard place; To rent or buy.
Whether renting is better than buying a property depends on individual circumstances, preferences, and financial circumstance, and there is no one-size-fits-all answer. We will explore the benefits of renting out your property as an owner and renting a property as a tenant instead of buying. It is important to carefully consider the costs and benefits of each option before making a decision.
At present, the property market is favourable to renters. This means that, as a property owner, if you have a property that you are interested in placing on the property market, it would be best to advertise it as a rental.
Rentals have a higher occupancy rate, and with the pressures faced by consumers, they are more likely to afford a rental property than the costs associated with a property purchase. A further benefit of advertising your property as a rental instead of a purchase is that you are more likely to find reliable tenants who will look after your property and pay their rent on time. According to WeconnectU, an end-to-end property management software solution, the overall number of residential rental leases has increased by 23% across all customers. Additionally, over the past year, the average number of properties in a rental agent's portfolio increased by 7%, from 181 to 193 on average.
Financially, renting the property makes sense, as you will potentially have more liquid capital. This can be beneficial should the rental property require last-minute maintenance. For potential renters, good locations, excellent security, and fibre-readiness are some of the most sought-after rental characteristics. Renters also tend to remain in the same home for longer periods of time. Clean, modern spaces with indoor and outdoor areas are in high demand.
Renting a Property
Renting a property can offer a number of benefits, such as flexibility, lower upfront costs, and less responsibility for maintenance and repairs. In South Africa, renting a home or apartment is an increasingly popular option. Many households are renting because they cannot afford to buy property, but others are choosing it as a lifestyle choice.
Whether you are looking for a small apartment or a large family home, there are plenty of options to choose from. This means that you can find a property that meets your needs and budget, without committing to long-term bond repayments. Renting a property is not without its disadvantages.
As a renter, you may not have the same level of control over the property as you would if you owned it, and you may be limited in terms of making changes or renovations. Additionally, rental costs can increase over time, and you may be subject to restrictions on the length of your tenancy.
While renting out your property to tenants has many benefits, potential landlords should remain cognisant of the financial strain that many tenants are under and will continue to be under into next year. In order to encourage tenants to occupy a property, landlords must find a balance between the push-pull forces of maintaining occupancy and ensuring they still receive a fair yield.
Potential tenants should also be aware that, although the options available are varied and numerous, landlords are able to increase their rental price to remain competitive and in line with current inflation rates.
Ultimately, the pros and cons of renting your property and renting a property should be carefully considered.
Speak to an experienced property agent about your property rental options.
Author: FMS Sales and Leasing