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8 June 2017

The ins and outs of a commercial lease deposit
South Africa - Rawson
A deposit is a predetermined sum of money which a tenant is required to pay the landlord before taking occupation of any commercial premises. “This deposit is kept by the landlord to serve as security during the period of the lease,” says Leon Breytenbach, National Manager of the Rawson Property Group’s commercial division. It is kept in the event that the tenant defaults on the rent, fails to pay an operating service or municipal account, or causes damage to the property.

Specified deposits
Commercial property deposits are higher than residential property deposits. “The current industry norm is that the tenant pays only one undefined deposit amount to be used for any or all of the three scenarios mentioned,” Breytenbach explains. However, best business practice would suggest three separate, specified deposits provided: one for rental, one for damages and one for services. This would prevent the landlord from using the whole deposit on one of the three possible payment defaults. In the event that the landlord needs to utilise a portion of one of the deposits, the tenant would be required to replace the amount, thus ensuring that a full deposit is available at all times for any future default or repair. It would be necessary to include a clause in the lease contract outlining the three separate deposits as well as their specific purposes. Another reason to distinguish between the deposits is because different deposits may take different amounts of time to be reimbursed at the end of the lease.
Rawson

Older buyers show the power of home equity
South Africa - BetterLife
Buyers over-50 are currently paying about twice as much for their homes, on average, as buyers under-30, but only about 30% more on their monthly bond repayments.

The average home purchase price paid by buyers aged between 20 and 30 over the past 12 months was R772 000, while that paid by buyers aged 50 to 60 was R1 337 000 - and that paid by buyers over-60 was R1 687 000, according to the latest statistics from BetterLife Home Loans.

However, there is a much narrower gap when it comes to the home loans obtained by buyers in these different age groups, says Shaun Rademeyer of BetterLife Home Loans. "Our statistics show that buyers aged 20 to 30 are currently paying an average deposit of around R90 000, which puts their average bond at R682 000 and their average monthly repayment at just over R6 800.
Older buyers show the power

May House Price Property Barometer
South Africa - FNB
Conclusion
From our May FNB House Price Index, we saw some strengthening in year-on-year house price growth again in that month, although the rate is still moderate and negative in real terms. This strengthening is backed up by the FNB Valuers’ MSI moving very slightly into positive month-on-month growth territory in April/May after prior months of decline.

However, a better recent momentum indicator for house prices is the month-on-month seasonally-adjusted measure. After some resurgence up until March, this measure has once more shown slowing growth in April and May, suggesting that any recent market strengthening may have been destined to be short-lived, and a simultaneous drop in the Manufacturing PMI in April may explain this renewed slowing by pointing to a renewed short run dip in the economy’s performance.

We note the improved weather conditions and their potential positive impact on Agriculture, along with the potential impact of stronger commodity prices on Mining. But we are also aware of the dampening impact of recent ratings downgrades, along with an uncertain political and policy environment, on confidence, and this could contain the magnitude of any economic growth improvement. The FNB forecast is for real economic growth to be only marginally better at 0.7% in 2017, compared to 0.3% in 2016. We don’t expect this to have a material positive impact on the housing market despite apparent mild 1st quarter improvement. And the recent slowing in month-on-month house price growth accompanied by a PMI dip convinces us to maintain our lowly 3% average house price growth forecast for 2017 as a whole.
May Property Barometer

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