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Property 24/10 - 117

19 July 2012

What rental increase is acceptable?
A Property24 reader asks:
I would like to find out where to find the law that stipulates that there are no limits to a rent increase? Also, could you recommend what rental increases are acceptable and how to manage the process with a tenant? 

David Beattie, principal of Chorus Letting, a Cape Town based specialist residential letting company, advises: 

There is no law on this subject. It varies in accordance with inflation and what is deemed reasonable based upon a multitude of factors. 

What increases are happening at the moment depends on the time of year, prevailing market conditions, the area, the existing rent relating to the market value, etc. I believe a maximum of 10 percent is acceptable and that an amount that is fair in keeping with all these factors mentioned should be calculated, as opposed to a flat rate. More

Key drivers of office demand now weak
For now, no sudden improvement in the demand for office space can be expected as key demand drivers are losing their vigour, according to a report.

This is the opinion of property economist Erwin Rode in the latest issue of Rode’s Report on the SA Property Market for the second quarter.

Discouraging for the office demand and vacancy-rate outlook was the deceleration in output produced by the services sector in the first quarter of the year.

The report reveals that waning growth of output in the services sector does not bode well for its employment prospects, which in turn implies continued weak demand for office space.

Furthermore, slumping business confidence is another bad omen for office demand; this as businesses are unlikely to expand premises or hire new employees while confidence levels are low.
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Property income and capital growth
With capital growth on property investments low compared to a few years ago, investors should look at income instead of capital growth.

When investing in plot and plan schemes, for example, it is important to be aware of the pitfalls of investing in this type of property, he says. 

There have been schemes where investors bought off plan and the growth percentage actually dropped for various reasons. 

“When buying you must look for property where you can earn from day one.”
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Maintenance duties in rental homes
Good property management is possibly the biggest factor to keep in mind when building wealth in property, according to an expert.

  1. Money (they want their rent to be paid in time and in full)
  2. The property value (good maintenance to the property will maintain its value)
  3. Trouble free rental experience (a good letting agent to ensure that they have the minimum of fuss)

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Sellers and agents - disclose fully!
In terms of the Consumer Protection Act it is very important for sellers to ensure they are covered effectively and agents to ensure full disclosure.

If all the relevant information is given to the buyer upfront it protects the seller and it obviously protects the buyer if, after signing, it is discovered that there is something faulty and has not been disclosed.  

“It is advisable to attach a “condition report” document to an agreement of sale, which lists various items that might need attention,” she says.

Steward explains that the agent should go through this checklist with the seller and it should be signed by the seller and the buyer. 
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A decade of property returns in SA
Over the last 10 years ungeared investment property in South Africa, both listed and unlisted, delivered astounding compound total returns of 407%.

South African commercial property’s journey over the last 10 years, and its prospects for the next 10 years will be in the spotlight at 10th Annual Investment Property Databank (IPD) Property Investment Conference, in Cape Town this month.

Fittingly titled “10 Years Back – 10 Years Forward”, the conference considers a decade of SA property and sets out to provide strategic insight into opportunities that lie ahead.

Stan Garrun, managing director of IPD SA, says the past decade has shown the South African commercial property sector to be very innovative and adaptive.
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Life rights property and my estate?
Property24 reader asks:

Arthur Case, the General Manager of Evergreen at Amdec Investments (Pty) Ltd, advises:

The refund calculation in a life right agreement must be agreed at the time of purchase. There is no set formula or return percentage and each life right developer will offer a different formula. 

The life right will remain in place until sold by the life right holder, or on the death of the last remaining spouse/partner, who is endorsed on the title deed as a life right occupant. 
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Woman buying property in maiden name
In today’s world it has become increasingly common for women to keep their own names when getting married and it often happens that women have bought their own homes before marrying.   

Between divorces (where a woman reverts to her maiden name or keeps her married name after divorce), buying property in a maiden name, and buying after marriage but in different names, there is sometimes some confusion when wanting to sell the property, says Lanice Steward, MD of Anne Porter Knight Frank. 

“Basically, it is very simple, if a woman buys a property in a maiden name and she wishes to sell that property at a later stage, she must sign the agreement either in her married name, with a copy of the marriage certificate attached to the sales agreement or sign the document in her maiden name,” says Steward. 

Legally both these names are valid as they have been given to her, she says. 
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Rode & Associates receives top honours
Property valuation firm Rode & Associates, has been honoured with top awards from the authoritative publication Professional Management Review (PMR.africa) in this year’s 2012 PMR.Africa rankings. 

The company received the Diamond Arrow Award in the Commercial (Low Volume) Valuations category as well as Golden Arrow Awards in the Residential (High Volume) and Specialised Valuations categories.

With a strong focus on measuring client service and satisfaction, the annual awards acknowledge excellence in the industry, setting benchmarks for other companies in the same field. 

The 105 respondents who took part in this year’s survey, and who ranked Rode & Associates top in its field, ranged from property developers and management companies, to financial institutions, government and state-owned enterprises and insurance companies.
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