Transitioning from homeowner to tenant? Here are key points you need to know.
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There are loads of reasons why you may have decided to go from being a homeowner to a tenant. You may be looking for a greater degree of flexibility or you may be considering moving to a different part of South Africa. Perhaps you just need some time to decide what your next move should be. Whatever your circumstances, these real tips from Jawitz Properties will help you manage the transition from owning to renting.
Be aware of the financial and practical implications
As a tenant, when signing the lease agreement, you need to be aware of the automatic escalation included in the lease agreement. Essentially even if you do not renew the lease agreement and it goes on from month to month, automatic escalations come into effect on the anniversary of the term and your monthly rental will increase by the % included in the lease.
The benefit to you as the tenant however, is that you will not be affected by all the other annual increases that you could experience as a homeowner such as levies and rates nor the fluctuations in the bank repo rate.
Another significant difference between owning and renting to bear in mind is that when you're a tenant, the competition for the home you are interested in can often be fierce. Rental properties are hot commodities in some parts of South Africa and you'll need to have your finger on the pulse of your search to successfully secure a home.
Make sure you understand all your rights and responsibilities
Take the time to read through your lease agreement and understand all the terms and conditions of it - especially if this is your first time renting a property. There are certain intricacies to a South African rental agreement that you may not be aware of. For example, by law, the deposit that you pay must be held in an interest-bearing account and refunded to you (together with the interest accrued) at the end of your lease agreement as long as the relevant exit inspections and finalised billing has been confirmed and agreed upon. These funds may not be used to cover your last month's rent or to tide you over for a month if you should encounter financial difficulties.
As a tenant, you will need to attend inspections of the property both before you move in and after you move out. You'll also need to take good care of the property and be aware that you may not use it for purposes other than what it was let out for. This means there may be limitations if you run a business from home.
Understand the limits on the personalisation of your property
Having been a homeowner, you will be accustomed to being able to redecorate and remodel your home as you see fit. As a tenant, it's important to remember that there are limitations on how you are allowed to make the space your own. If you make any noticeable changes (from picture hooks in the walls to fresh coats of paint in your preferred colours), you're likely to have to refurbish and repaint when it's time to move out.
Keep your long-term goals in mind
While there are significant benefits to being a tenant, your decision to rent for an extended period of time might impact your long term financial goals. When you're paying rent, you're contributing to someone else's long-term financial security, rather than paying money into an asset that will one day be your own. Be sure that capitalising on the advantages of being a tenant is the right decision for you and your family.
If you're a current homeowner and you'd like to enjoy the flexibility that comes with being a tenant, get in touch with Jawitz Properties. We will help you sell your home and find you the right rental property for you and your family.
Author: Jawitz Properties
