Latest news with #PayProp
Zawya
6 days ago
- Business
- Zawya
Top suburbs for buy-to-let investments in South Africa: where to invest now?
High yields, low vacancies and rising rental demand are fuelling investor confidence in South Africa's rental market. With the country's average gross rental yield reaching 10.36% in Q2 2025 and national vacancy rates at their lowest since 2016, conditions are ripe for property investors. Bradd Bendall, BetterBond's National Head of Sales, says investors should look closely at suburbs offering a combination of strong rental yields and low vacancy rates — the clearest indicators of sustainable income and tenant demand. "South Africa's residential rental market is showing strong growth, with demand outpacing supply in many parts of the country, says Bradd Bendall, BetterBond's National Head of Sales. 'This, coupled with the relatively low prime lending rate, creates ideal conditions for investors looking to expand their buy-to-let portfolios.' The PayProp Rental Index for Q1 2025 reports a year-on-year rental increase of 5.6%; a performance the report describes as 'the best South Africa's rental market has seen in years'. When identifying promising suburbs for property investment, Bendall says two key metrics should be top of mind: rental yield and vacancy rate. According to the Global Property Guide, South Africa's average gross rental yield stood at 10.36% in Q2 2025. Drivers of rental yield Factors that influence rental yield include location and demand. 'Properties in urban centres, university towns or commercial hubs tend to offer higher rental returns,' says Bendall. 'Not only is the tenant demand usually high, but the rental income is more consistent.' Different property types can offer stronger rental yields. Apartments and sectional-title units typically require minimal upkeep, making them more cost-effective to maintain. Their lock-up-and-go convenience also appeals to a wide range of tenants. Properties located in areas with reliable service delivery, strong infrastructure, and robust economic activity are consistently in demand. Long-term leases tend to provide a stable and predictable income stream, while short-term rentals, particularly in popular tourist destinations along the coast, may deliver higher returns, but require more management. 'Consider your investment goals carefully when choosing where to invest in an income-generating property,' advises Bendall. 'Work with estate agents in your preferred area to understand the market and demand. Factor all costs, including levies, rates and maintenance in your calculations when estimating a property's likely rental yield.' Considering the two metrics - rental yields and vacancy rates - Bendall recommends the following buy-to-let suburbs by province: Western Cape: TPN reports that the Western Cape recorded its lowest vacancy rate to date in the third quarter of 2024. Vacancy rates dropped to 1.07%, down significantly from the previous low of 1.16% reported in early 2016. 'This low vacancy rate is a combination of high demand and low supply,' explains Bendall. 'A semigration hotspot, many people relocating from other provinces to the Western Cape will rent before they buy.' The PayProp Rental Index reports that the province also boasts the highest average rent in the country at R11,285, with a 9.6% annual increase that is well above the national average. In Cape Town, Woodstock, Observatory, and Salt River are top picks for student and young professional renters seeking proximity to universities and commercial centres. Rental yields in these suburbs range between 8% and 11%, with student accommodation developments like Peak Studios in Observatory reporting occupancy rates as high as 98%. Bellville in Cape Town's northern suburbs is also a strong performer, says Bendall. Popular with young families and young professionals, Bellville enjoys low vacancy rates and rental yields of up to 11%. 'Many of the rental properties in this area are spacious and offer comparative value for money. They are also well-located close to amenities and recreational facilities. Johannesburg: Gauteng consistently ranks as one of the top-performing provinces for rental income. Research by The African Investor indicates gross rental yields of 11% to 16% in the province, with an average rent of just over R9,200 - the third highest in the country. Sandton remains one of the most sought after suburbs in the country, with buyers and tenants drawn to a vibrant, cosmopolitan lifestyle. Located within Gauteng's economic hub, Sandton is conveniently located with easy access to airports and other parts of Gauteng. Sandton's rental market has wide appeal. It attracts young professionals, expatriates and families who want to enjoy the lifestyle it offers. Luxury sectional-title units offering convenience and security are particularly sought after in Sandton and neighbouring Rosebank, notes Bendall. Bedfordview's rental market has remained resilient, with its secure estates reporting rental occupancy rates consistently above 90%. Investors are also interested in Braamfontein, where a strong demand for student accommodation is seeing rental yields of over 10%. Similarly, a need for student accommodation is driving rental demand in Pretoria, notes Bendall. Menlyn, Brooklyn, Hatfield and Arcadia are high-demand areas, especially with students and young professionals. 'The combination of low vacancy rates and relatively high rental yields of between 9 and 11%, make these areas a good option for savvy investors. KwaZulu-Natal: According to TPN's Vacancy Survey Report for Q3 2024, the vacancy rate in KwaZulu-Natal declined to 7.12% by the end of the year, slightly lower than the 7.36% recorded in 2023. In Durban, Umhlanga and Ballito remain sought-after rental hotspots, offering consistently high rental yields and low vacancy rates. These areas are also popular among tourists and business travellers, with developments such as The Pearls of Umhlanga achieving occupancy rates of up to 90%. 'The North Coast of KwaZulu-Natal is experiencing significant growth, with new developments attracting a range of buyers and investors,' says Bendall. The Sibaya Coastal Precinct, by example, offers a dynamic work-live-play lifestyle and a variety of rental properties designed to meet tenants' changing needs. Time to invest With the prime lending rate currently at 10.75%, the climate is favourable for savvy investors looking to secure high-yield rental properties with low vacancy rates. 'A well-located property in areas with strong access to transport, education, and economic opportunities is more likely to deliver solid rental returns and sustained occupancy.' says Bendall. 'Investors would do well to make the most of the current rates environment by investing in property in areas where the demand for rental accommodation is high and sustained.'
Zawya
11-07-2025
- Business
- Zawya
South Africa: Gauteng rental market booms as semigrants return for affordable living
Gauteng's rental market — the largest in South Africa — is gaining momentum as returning semigrants and new arrivals seek affordable living options in the country's economic heartland. With nearly 38% of households renting, and demand rising faster than supply, the region is fast becoming a hotspot for both tenants and savvy property investors. This growth is being fuelled in part by a reported reverse semigration trend, with many who had previously moved to the Cape now returning to Gauteng. According to the Wise Move 2025 Migration Report, an estimated 25% of those who left for the Cape have since headed back. Much of this shift is driven by Gauteng's comparatively lower cost of living and greater economic opportunities. Property prices are approximately 27% lower than in the Cape (average R1.3m vs R1.8m), and rentals around 20% more affordable, with PayProp citing average monthly rents of R9,201 compared to R11,285 in the Cape. The rental market is often where people returning or moving to the metros turn to before they even start thinking about purchasing property. Gauteng, as the biggest economy in the country, is therefore also the largest rental market with about 37.8% of households renting according to TPN. Despite the high demand, rents have remained affordable, increasing by only around 2.9% on average over the last year according to PayProp. That said, many areas have seen increases of 3% - 5% due to higher demand and a lack of stock, thus presenting opportunities for rental investors, according to rental agents from Seeff. Aside from more affordable rentals, the costs of living are also slightly lower in Johannesburg and Pretoria, according to The Gauteng metro areas also offer a much wider range of more affordable rentals including more entry-level housing. Investor hotspots emerge Christa Roos, licensee for Seeff Helderkruin, says she has observed an influx of people heading to areas in the valley (Kloofendal, Helderkruin, Wilro Park and Roodekrans), largely due to the good value for money. Rental properties move very quickly in the R15,000-plus market. Joburg South and Alberton are very popular due to affordability, especially in the R4,500 to R8,000 per month range, says Ruth Sturgess from Seeff, adding that there are investor opportunities to earn steady rental incomes from R6,000 to R12,500 (family houses in Kibler Park). According to Carin Buitendach from Seeff Boksburg and Benoni, these areas are very popular for their affordability in the R5,000 to R7,000 per month range, with top-end rentals reaching R15,000 for a freestanding house rented out by Seeff. Rents grew by about 5% over the last year, and there is opportunity for investors to earn steady monthly rentals of R6,000 to R6,500. Randburg offers a broad middle-class appeal, and a great choice of affordable rentals in the R7,000 to R14,000 per month range while larger homes tend to rent out in the R25,000 to R35,000-plus range. The Joburg North West area offers affordability for those who commute for work into Randburg and Sandton. Rochelle Holland, Seeff's sales and rentals manager for the area says people often rent before they buy in the area. There is also an opportunity for rental investors in the R500,000 to R950,000 price brackets as these are very popular rentals and can earn a steady income of R7,000 to R12,000 monthly. The Eagle Canyon Golf Estate is also very popular for rentals, priced mostly in the R20,000 - R30,000 range with high-end homes renting out for up to R60,000 - R70,000 by Seeff. The northern suburbs of Sandton/Bryanston/Fourways is also hugely popular with a mix of status and wanting to be close to business areas driving demand, according to Seeff Sandton. The R10,000 - R20,000 bracket is the most popular, especially for sectional titles while luxury homes range between R45,000 and R60,000, and super homes well above this. In the Pretoria metro, areas such as Centurion are popular for their proximity to the metro and Midrand, according to Tiaan Pretorius, manager for Seeff Centurion who says correctly priced rentals can go within hours or days. Prices start from R5,000 with the highest demand in the R14,000 to R25,000 range. Rental escalations have been in line with the CPI at between 3% and 5%. The Pretoria East rental market has been particularly busy this year with Seeff recording some of its best months, according to PG van der Linde, rentals manager for Seeff Pretoria East. The R12,000 to R20,000 bracket has been most active. He says an added boost has come from people who are still hesitant to buy and choose to rent for the meantime. All rights reserved. © 2022. Provided by SyndiGate Media Inc. (
The Citizen
06-07-2025
- Business
- The Citizen
Why now is the most profitable time to become a landlord
Why now is the most profitable time to become a landlord Have you ever wanted to dip your toes into the world of real estate investments? Real estate experts say that now is the perfect time to do so. 'As South Africa's property landscape enters a new phase of growth and resilience, the rental and property sales markets are aligning to create a golden opportunity for those considering becoming landlords. With robust rental performance, moderating inflation, and consistent housing price appreciation, there has seldom been a better time to venture into residential property investment,' says Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa. According to the latest PayProp Rental Index for Q1 2025, the national rental market is experiencing its strongest growth in nearly eight years. The average rent in South Africa climbed to R9,132, reflecting an annual increase of 5.6%, the highest quarterly rental growth rate since Q3 2017. This surge is especially noteworthy when considered alongside low inflation levels, which averaged 3.2% in January and February, and dropped to 2.7% in March. This widened the rental-to-inflation gap, offering landlords real-terms rental growth not seen in years. Another key factor making now an opportune moment to enter the landlord market is the record low in tenant arrears. Only 17.0% of tenants were in arrears during Q1 2025, matching the lowest level ever recorded by PayProp. While South Africa's residential rental market is surging, house price growth has been slower and more measured – until recently. The Residential Property Price Index (RPPI) published by Stats SA for January 2025 shows that annual national house price inflation was 5.2%, a modest rise from the revised 5.1% in December 2024. This comes after a period of subdued growth in 2023, when the average annual increase hovered around 1.8%, following even lower rates through much of 2022. However, the momentum is beginning to shift upward. 'This gradual but promising upturn in house prices means that savvy investors can still enter the market while prices remain relatively affordable, before sharper increases potentially take hold later in the year. The current climate offers a compelling mix of capital growth potential and robust rental income streams, particularly in high-demand metros such as Cape Town, Johannesburg, and Tshwane,' says Goslett. What's more, the South African Reserve Bank's decision to cut the prime lending rate by 25 basis points earlier this year – and further reductions hinted at for later in 2025 –improves affordability for prospective property buyers. Lower interest rates reduce bond repayments, enhancing cash flow potential and return on investment for buy-to-let properties. 'We encourage prospective landlords to speak with one of our property professionals to explore investment opportunities tailored to your financial goals. Whether you're looking to grow your wealth through rental income, benefit from capital gains, or secure a retirement nest egg, 2025 is your moment to make the move,' Goslett concludes. Issued by: Kayla Ferguson
The Citizen
03-07-2025
- Business
- The Citizen
More South Africans rent, but arrears and tenant risk rise
A prospective tenant's income remains the most reliable indicator of payment risk, says PayProp. Image: Supplied A prospective tenant's income remains the most reliable indicator of payment risk, says PayProp. Picture: Supplied With high interest rates and rising living costs, more South Africans are being pushed into the rental market – a trend that has worked in favour of landlords, who have seen improved rental returns in 2025. According to the first edition of the 2025 Rode Report, high interest rates remain a key driver of rental demand, discouraging many would-be homebuyers from entering the property market. 'This will continue to push some potential buyers to opt for renting instead,' the report notes. Since September 2024, residential rentals have consistently grown faster than inflation. In the first quarter of 2025, nominal rental growth ranged between 1.2% and 5.4% across South Africa. Three provinces recorded rental increases above the inflation rate, with the Western Cape leading at 5.4%. Read more Here's a list of what your landlord is responsible for in your rented flat However, affordability remains a key constraint that could limit landlords' ability to raise rents further this year, the Rode Report states. ALSO READ: Looking to rent? These are your rights as a tenant Applicant risk rising With household budgets under strain, rental applicants are becoming riskier. 'Increasingly, prospective rental applicants could present a payment risk,' says André van Rooyen, head of sales at rental payment platform PayProp. Data from PayProp's Tenant Assessment Report for the first quarter shows that 26% of prospective tenants fell into the highest risk bracket – up from 25% in the same quarter last year. This means more than a quarter of rental applicants were flagged as high risk. Despite this, the largest group of applicants – 39.6% – was still classified as minimum risk. Around 20% were low risk, and 14.5% were deemed medium risk. Van Rooyen notes that recent data points to a growing polarisation in tenant risk profiles. 'The distribution across the risk spectrum suggests that rental applicants are becoming more concentrated at both ends of the risk scale lately,' he says. 'This means careful tenant selection is more important than ever.' ALSO READ: Average rent in Gauteng tops R9k: How do other provinces measure up? Income still the strongest risk indicator Van Rooyen says a tenant's income remains the most reliable indicator of risk. In the R80 000-and-above income bracket, more than 60% of applicants were classified as minimum risk, with only 12.2% falling into the high-risk category. In contrast, 37% of applicants in the R10 000 to R20 000 income band were rated as high risk, with just 23% classified as minimum risk. 'Affordability is one of the first things any agent will check,' Van Rooyen says, adding that thorough vetting is especially important for lower-priced properties. Younger applicants tend to be riskier tenants, according to PayProp's data. In the 20 to 29 age group, fewer than 30% of applicants were classified as minimum risk – likely due to shorter rental histories and limited credit records. By contrast, 61.3% of applicants over the age of 60 were considered minimum risk. 'Tenant risk declined sharply for all age groups over 50,' Van Rooyen notes, attributing this to more stable finances and well-established credit profiles. ALSO READ: Joburg elites spend more than R90k on monthly rent Defaults increasing Alongside higher applicant risk, rental defaults are also on the rise. According to PayProp's data, 18.3% of tenants are in arrears, owing on average 77.5% of a month's rent. Ross Fitzcharles, founder and CEO of property technology firm Preferential, warns that this financial strain poses a serious challenge for landlords. 'The rising financial strain tenants experience could mean that landlords face a real and growing risk of rent defaults, which can lead to prolonged vacancies and the costly process of legal eviction.' While legislation protects tenants against unlawful eviction, Fitzcharles says the same laws can make it difficult for landlords to remove non-paying tenants. Despite these risks, only 60% of landlords screen tenants before signing leases. 'Screening is critical to help identify reliable tenants who are more likely to meet their financial obligations,' Fitzcharles stresses. This article was republished from Moneyweb. Read the original here.
IOL News
03-07-2025
- Business
- IOL News
Landlords beware: 26 per cent of rental applicants in South Africa classified as high risk in Q1 2025
Interest rates, supply and demand, popular locations, and property types drive South Africa's property market. Image: Henk Kruger/ANA/African News Agency More than a quarter of South African rental applicants were classed as high-risk in the first quarter of this year. A detailed risk analysis in the latest PayProp Rental Index highlighted that this is a significant challenge for landlords and rental agents. Based on data from the Tenant Assessment Report, PayProp's market-leading tenant screening tool, 26% of prospective tenants fell into the scoring system's highest risk bracket, up from 25% a year ago. 'Landlords are seeing improved returns from healthy rental price growth in 2025, but it's important not to get complacent,' says André van Rooyen, head of sales at PayProp. 'Tenant affordability is lower due to the cost of living in many provinces, and with one in four applicants potentially presenting a payment risk, thorough vetting is non-negotiable,' van Rooyen said. Traditional credit checks were said to offer only part of the picture when it comes to assessing tenant payment reliability, as they score the applicant based on their debt repayment history but often do not take rental payments into account. In contrast, PayProp combines credit scoring with rental payment histories captured from the platform to reveal where tenants fall on the risk spectrum. Analysis by PayProp ahead of a recent training webinar found that it was 94% better at predicting bad tenant behaviour than a traditional credit score when applied to a sample of real tenant data. In the first quarter of this year, 39.6% of lease applicants were rated minimum-risk, 20.0% were low-risk, 14.5% were medium-risk, and 26.0% were high-risk. This distribution across the risk spectrum suggests that rental applicants are becoming more concentrated at both ends of the risk scale lately, making careful tenant selection more important than ever. Income was said to be the strongest determinant of tenant risk. Among applicants earning R80 000 or more per month, 60.6% were classed as presenting minimum risk and just 12.2% as being high-risk. In the lowest income bracket (R10 000 - R20 000), only 23% qualified as minimum risk, while 37% were high-risk. 'Affordability is one of the first things any agent will check, and this helps demonstrate why,' says van Rooyen. 'It also means that careful vetting is even more essential for lower-priced properties, as applicants are more likely to fall into lower income brackets. "However, there are high-risk and low-risk tenants in every income bracket, and using smarter tools helps agents identify low-income, low-affordability tenants who nevertheless have perfect payment records.' Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading Age was also said to play a clear role, as the 20 - 29 age group showed the lowest share of minimum-risk tenants (29.6%), likely due to thinner credit files and shorter rental histories. However, despite being unknown quantities in normal credit scoring terms, this group tends to have more disposable income after debt and rent, making them potentially better prospects than raw scores may suggest. In contrast, 61.3% of applicants over 60 were classified as presenting minimum risk, and tenant risk declined sharply for all age groups over 50, thereby indicating a pattern likely linked to more stable financial positions and mature credit profiles. According to Experian's latest Consumer Default Index (CDI) for the first quarter of this year, despite their active economic roles, young South Africans face barriers in accessing the credit market. Representing nearly 24% of the adult population, the youth segment (consumers around 30 years and younger) was said to account for only 9% of the total credit market, holding just 3% of outstanding debt. Vehicle Asset Finance (14%) and Retail Loans (10%) are the most common credit products for youth, reflecting their current financial needs and market accessibility. In contrast, youth only hold 1% of the Home Loans market, underscoring the long-term financial milestones that remain largely out of reach for many people. Interestingly, the report finds only slight gender-based differences in tenant risk, despite women earning roughly 80% of what men do, according to Stats SA. Some 40.1% of men were assessed as minimum-risk, compared to 39.1% of women. One possible explanation is that women spent 3.2% less of their income on debt repayments than men, improving their overall affordability profile. While trends by income, age and gender offer useful insights, van Rooyen reiterates that every tenant is unique. 'Each demographic contains both high and low-risk individuals,' says van Rooyen. 'That's why risk reporting based on proven payment behaviour is essential for agents managing tenant selection. It's not just about reducing risk for agents, it also ensures that good tenants who pay their rent reliably can go to the front of the line, no matter their income levels or what's left after servicing current debts,' van Rooyen said. 'With more rental applicants falling into the high-risk category than a year ago, the days of relying solely on gut feel or credit scores are behind us. The smartest agencies are combining data sources for a full-circle view of tenant reliability.' According to the South Africa Property Market Predictions for 2025 published by the Landlord Association of South Africa (LASA) in January, the South African property market is set to undergo significant changes in 2025, influenced by shifting economic dynamics, evolving consumer behaviour, and potential legislative amendments. The National Residential and Commercial Landlords Association said the South African Reserve Bank (SARB) was expected to maintain a cautious monetary policy stance in 2025. It said that while inflation may stabilise around the target range of 3% to 6%, marginal interest rate increases could be implemented to manage global economic pressures. This would impact home loan affordability and demand for residential properties, it said. LASA said that despite a challenging global economy, South Africa's GDP growth is forecasted to recover modestly in 2025, supported by mining exports and infrastructure investment. It said urban areas, particularly Gauteng and the Western Cape, were likely to see a resurgence in property development and demand. Independent Media Property
