PROPERTY NEWS - South Africans breathed a sigh of relief when the South African Reserve Bank (SARB) announced that the repo rate was going to stay at 7%.
However, the predicted 0% economic growth figure casts a shadow of anxiety over the country's economic future.
Property investors need to be vigilant when it comes to not only managing their rental income, but have to take steps to maintain it. Stefan du Plessis, a managing member at Rent Protect, an insurance company that offers rental income protection, says, “When it comes to managing personal finances, people can generally follow a ‘rule of thirds'.
Approximately 30% of an individual’s monthly budget should be allocated to housing, 20% to their transport expenses and the remainding 50% to their cost of living, such as school fees, groceries, and savings to name a few.”
Cost of living
Du Plessis believes that the weak rand, despite its recent steps towards recovery, and the additional economic pressures such as the prolonged drought, are driving up the cost of living to a point where consumers and therefore, tenants, are having a tough time prioritising and changing their spending habits.
According to the last Old Mutual Savings & Investment Monitor, only 46% of those employed in major metropolitan areas actually have a personal budget, even less have a household budget in place. The report also revealed that 2016 has been the worst year for personal saving since the 2008/9 global economic crisis.
TPN’s latest residential payment monitor shows that one in ten tenants default on their rental payments which obviously has a knock-on effect on property owners/landlords and managing agents.
