Bank charges: stop them gobbling rental income

Mike Spencer* Old-fashioned advice to curb a silent cash guzzler.

Are bank charges chewing into your rental income? I recently received a notice to let me know about the increase in bank charges on my property bonds. R52 pm service fee for each bond including second bonds, Plus R12,50 for each cheque I use to pay my bond and R16,50 when I paid in cash!

But the same thing will happen when your tenant pay his rental. While this may not seem like a huge amount of money when you are receiving large rentals it is an irritation when you are accepting rentals of R3 000 pm. Either way it can add up to a lot of money. R198 per annum if your tenant pays cash and R150 pa when paying by cheque. When you are letting out self-store garages this could be a substantial portion of your rental income!

In the old days there was always a clause in the tenant's lease to state that all payment had to be "free of bank exchange". Meaning that if there were costs involved in paying through a bank then the tenant had to pick up these charges. Maybe it is time for us to go back to a similar system today.

In the chain of rental payment this all adds up. The tenant pays the managing agent, the managing agent pays the landlord. This could mean a cost of between R33 on cash payment and R25,00 for cheque payments. A substantial loss to everyone.

For more about bank charges and your home loan, read Rage over home loan fees.

* Mike Spencer is a Bloemfontein-based property valuer, estate agent and sectional title expert with Platinum Global.

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