The rental market changes over time, generally in an upwards direction but occasionally down.
In the residential market, because of the interference by government acts, the tendency has been to change to two months’ notice.
But for commercial, there are less controls and leases tend to be three-five years with options to renew.
Despite the COVID-19 lockdown, all types of rentals have been in demand though student accommodation is battling a bit.
Landlords who take into account the market when their lease is up for renewal or their property goes empty don’t have a problem getting a new tenant if their price is right.
Rentals are a balance between what the landlord will accept and what the tenant can afford and is willing to pay.
Landlords don’t decide on rentals, tenants do.
If one tenant offers too little the landlord will not accept their offer.
If another offers an acceptable rental the landlord and the tenant will come to an agreement.
The reason why there is a factor in the market is either that the landlord is asking too much or the tenant is offering too little.
The market is always balanced but some landlords in particular seem to think that if they stick to their over ambitious rental, a miraculous tenant will someday appear.
It can happen but it’s highly unlikely.
I can recall when Taiwanese-Chinese nationals arrived in the Free State to take up the tax-free development areas in Thaba Nchu they were gobsmacked with the perceived low prices for homes in Bloemfontein.
Many paid double the going rate. But they soon learned.
Letting your place stay empty when you have a good tenant prepared to pay a fair price is just silly.
If your rental is R10 000 per month and you get an offer of R8 000, you seriously need to consider it.
If your office stays open for just one month, then effectively you have lost R0 or the equivalent of the “loss” that you would have made by letting the offices at R9 000 for 10 months.
If you leave it empty for two months then it climbs to one and a half years.
What I am trying to say?
If your place stays empty, then you are losing a month’s rental every month it stands empty.
By letting it for R1 000 less just one month sooner, it will take nine months before you are in the same situation that you would have done by letting it at “your” full rental.
It is very difficult to catch up on lost income due to an empty property.
Rather a bird in the hand than nothing at all.
- Mike Spencer is the founder and owner of Platinum Global. He is also a professional associated property valuer and consultant with work across the country as well as Eastern Europe and Australia.