'How to be a successful landlord'

Owning rental property has long been regarded as one of the best ways to safeguard a long-term investment and achieve a decent return, but current conditions in the property market mean that landlords now really have to "work smarter" to come out ahead.

"It is not that there is any lack of demand for rental property," says Jan Davel, MD of the RealNet estate agency group.

"In fact, according to recent research published by Mike Schussler of Economists.co.za, one in every five households in SA is currently renting a home - of which properties about 660 000 are in the formal sector and 1,6m not formally recorded.

"In addition, rental returns do seem to at least be keeping pace with inflation. According to the newly-launched PayProp Rental Index, the average home rental in SA is currently 6,6% higher than a year ago, whereas the rate of inflation is only expected to top 6% in the first part of this year before dropping back again into the Reserve Bank's preferred 3% to 6% range."

The problem, he says, is that the economic woes that have beset the country over the past few years have also affected tenants, and that, according to the TPN Rental Payment Monitor, the percentage of tenants who do not pay their rent every month, or pay only part of it, has consistently remained at around 20% since the third quarter of 2009.

"And this situation is poised to get worse in the light of a possible new recession in Europe this year, higher food and transport costs locally, higher municipal tariffs for water and electricity and the possibility, however faint, of an interest rate increase to curb inflation that would further weaken household budgets - and tenants' ability to afford their rent."

Consequently, Davel says, prospective and existing landlords should take the following steps to ensure the safety and profitability of their investments: