Rich, famous, gvt employee: everyone's feeling property pain
Whether you're a tax collector or rich fund manager, it's become a struggle to pay rent, offload property debt

From lowly tax auditors to high-flying hedge fund managers - everyone's struggling to pay for the roof over their head these days, discovers Tabloid Tuesday, in this wrap of recent property news.

"The tax man cometh - to help" - himself, hopefully. Tabloid Tuesday reporters, fatigued by confusing tax returns and burdened by property-related tax administration, were intrigued to spot that headline on our favourite tax site, Moneywebtax.

The American tax authorities, we were told, would be sensitive to normally compliant taxpayers. No sign of the South African Revenue Service (Sars), though, and Moneywebtax visitor Logan grumpily asked: "What relevance is this article to us South Africans?"

Many will be hoping that Logan also muttered his dissatisfaction around the office within earshot of Sars chief Pravin Gordhan, assuming of course it is the real Logan. You know, dishy Logan Wort, who we last heard was still top media man for the South African Revenue Service.

They'll be pinning their hopes on Logan putting in a good word with Trevor's pals when it comes to carving up the annual budget next month, with some tasty morsels for property owners and those who'd like to get on the real estate ladder.

For, as we heard in the Sunday Times this weekend, even our well-paid tax collectors are taking serious strain in these times of higher interest rates.

Take Thabo Tsotetsi, asset auditor at the South African Revenue Service, who it was reported has taken to moonlighting as a small-time landlord. "Since my budget was mostly going to debt payments, I decided to sublet one bedroom of my flat just to have extra income, which I used to settle and close some of my accounts," the newspaper reported him as saying.

Tabloid Tuesday hopes Tsotetsi's got a friendly landlord himself, as it's very unusual for rental agreements to allow tenants to sub-let. Still, at least Tsotetsi's got the right idea: harnessing real estate to produce a steady income stream, even though true ownership remains elusive for now. "I'm one of those who (were) hit hard, so much so that I abandoned my plan to buy a house...I had already taken out a mortgage and cancelled it soon after the first interest rate hike," he was quoted as saying.

Now, about the tax on rentals...

High-flying fund managers become dud tenants. Even the rock stars of the investment world are having a tough time paying their rent these days. The Independent reports that rents for offices in London's Mayfair and St James have plummeted by about 30%, thanks to a decline in hedge fund fortunes. Their landlords, in turn, are being hammered.

The commercial property agency NB Real Estate, said The Independent, has released new research that "shows the rent in swanky west London offices tumbled from £120 per square foot at the end of 2007 to £85 at the end of last year, a consequence of a bad year for hedge funds". They have been vilified for short selling bank shares, have suffered mass redemptions and experienced their worst ever full-year losses, it continued.

"The downturn has forced hedge funds to cut costs and renegotiate rents, leaving the landlords with little option but to reduce their rents and increase incentives - which include offering rent-free periods - as the number of tenants dwindles," said the site. The Independent told how not far off 110 funds at 66 companies have collapsed in the past two years, according to Hedge Fund Implode-O-Meter, a website set up to monitor collapsed and ailing alternative investors. James Gillett, director of NB Real Estate's central London markets team, was quoted as saying: "Investment banks and commercial banks have had it tough, but hedge funds are having an even tougher time.

"The boom in the hedge fund sector meant they paid scant regard to the property costs they were taking on. The sector's high profitability meant that they were willing to substantially outbid the rest of the market to get their staff into the right space quickly."

The only way is - still down. You can rely on Lew Geffen, head of Lew Geffen Sotheby's International Realty, to alert the nation to a downward price spiral. You will recall he is the estate agency boss that got everyone's proverbial knickers in a knot when he suggested that property prices would plummet in South Africa- and then went to ground amid an outcry.

Lew kicked off the new year on a similar tack. He was reported in the weekend Sunday Times as saying he expects "house prices to decline more sharply than many had forecast.

"He cited the example of a house offered for R7m in February last year that was finally sold for R5,8m and another, in Cape town, on offer for R17m finally being sold for R12m."

As recently as November, Geffen told Realestateweb that he believes "now is a fantastic time to buy." "If Warren Buffett was here, he'd be buying everything," said Geffen of the investment sage of Omaha.

Prices not sticky or sweet. Alex Rodriguez, the US sports star linked to the pop world's Material Girl last year, is also finding that the real estate market is no longer a candy shop for buyers. The Wall St Journal reports that he has cut the asking price of his Coral Gables, Fla., home to $12,3m - just above the $12m he and his estranged wife, Cynthia, paid for it in 2004. The Yankees slugger first listed the house in the northern hemisphere autumn for $14,9m. The Miami mansion underwent substantial renovations, says the report, quoting listing agent Polly Schiff of Coldwell Banker.

The 33-year-old has also put a Manhattan apartment on the market for $10m - about $4m less than what he had originally been asking, said the report.

When you've got to go, you've got to go...

Article from: www.moneywebtax.co.za