Senior citizens a new class of landlords

Senior citizens in the established south-eastern suburbs of Pretoria are unlocking value in their homes by renting to tenants and becoming tenants themselves.

Lenie Visagé of RealNet Realty, which serves suburbs such as Irene, Pierre van Ryneveld, Elarduspark and Erasmuskloof, says this new trend makes good sense for older homeowners who want to scale down because of security and home maintenance factors.

“Such owners typically have a very small or no mortgage on their homes and can achieve rentals of about R6000 to R8000 a month for three-bedroom family homes. Becoming landlords is a better proposition for them in a market where there is great rental demand but downward pressure on selling prices.

“Consequently, they are not interested in selling, but are letting their properties and moving to smaller and more secure accommodation where maintenance is less onerous. They are typically targeting townhouses with monthly rentals in the region of R4000.”

She adds, however, that an analysis of her office’s sales figures for the past year reveals that 15% of sellers are in the market because they need to scale down to smaller or cheaper property.

“It was surprising, though, to find that 25% of stock on our books comes from sellers who indicate they are selling because they plan to emigrate,” she says. “The figures also show that we currently have 40% more stock than a year ago.”

Sellers have also become more willing to negotiate with buyers. “A year ago the difference between asking and selling prices in our area was 2%. Today it is between 10% and 12% - a clear indication that sellers are becoming more aware of market realities.”

Stands in new developments, of which there is a good supply in the price range between R430 000 and R1m, are not attracting many buyers at the moment, she says. Buyers in general are nervous about purchasing undeveloped stands because of uncertainties about escalating building costs and interest rates. And investors prefer built property since it ensures immediate rental income and thus return on investment.

Article by: