Is your property Airbnb-able?

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When deciding whether to become an Airbnb host, it’s important for you to understand how the laws work in your city.

According to Brett Herron, the mayoral committee member for transport and urban development at the City of Cape Town, different holiday accommodation land-use types, such as B&Bs and guest houses, are regulated by the City’s zoning scheme, called the Development Management Scheme.

If referring to Cape Town, for instance, the city has a Guest Accommodation Policy that sets out the guidelines that have to be considered when applications are made to obtain the necessary planning permissions. According to the Policy, if you wanted to provide a self-catering, flexible accommodation option in line with current trends for transient guests, visitors and tourists, then these are the guidelines that should be followed.

Catering to guests’ needs

In order to qualify, a building or group of buildings consisting of separate accommodation units rented for residential purposes, each incorporating a kitchenette / full kitchen, but may include an option of meals being provided communally to guests. This can also include communal areas for exclusive use by lodgers /transient guests, where guests can dine.

Architecturally speaking

When looking at the building structure itself, certain guidelines also have to be met. The form and scale of the development are determined by the development parameters of a particular zone (i.e. floor space, building lines, height) and the site’s context.

No general restriction exists regarding the number of units that are allowed, but must be appropriate in the local context of the building/site characteristics and surrounding area. Restrictions on the number of units allowed per development may thus be imposed in certain cases.

Location, Location, Location

As long as there are no zoning restrictions or area-specific by-laws that prohibit you from short-term rental of your property, there really isn’t anything standing in your way. Criteria that should be considered, however, are as follows:

  • Proximity to public transport routes, commercial centres and tourist activities;
  • The character of the surrounding area and community;
  • Mixed-use or commercial locations (including areas designated for high-density development) are encouraged.

In many cities, it is required to register, get a permit, or obtain a licence before you can list your property or accept guests, and short-term bookings may be prohibited altogether. Local municipalities may also vary greatly in how they enforce these laws.

But it’s important to remember that, for most, it is entirely possible to list your property on Airbnb. Once you decide to begin your journey towards registering an Airbnb, it is important to consult your local municipality to find out if there are regulations standing in your way. If you need assistance in starting up your Airbnb, do not hesitate to get in touch with us.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

The ins and outs of home insurance

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Home insurance is there to protect one of the most important assets you own. And when done properly, it will allow you to insure both the structure of your home and the life that is lived within its four walls.

Home insurance can be divided into three sections: Building Insurance, Home Contents Insurance, and Personal Valuables Insurance. The purpose of Building Insurance is to cover only the structure of your property, and Home Contents Insurance covers items such as appliances and furniture that stay within the home, while Personal Valuables Insurance covers the household items that travel with you out of your home, such as cell phones and laptops.

To ensure that your home insurance policy covers you as best as possible, you should understand your cover fully and assess its accuracy over time as your property changes.

Check your liability limit

It’s important that you should be covered realistically, which is why comprehensive coverage is always advisable. When you consider the costs of rebuilding your property or replacing its contents, the numbers can quickly add up, and you need to be sure that you are covered adequately should you need it.

Cover for natural occurrences

While damage caused by natural disasters, such as hurricanes and tornadoes, is usually covered by insurance policies, other natural occurrences may be excluded. When you live near areas that are prone to natural influences, such as a riverbank or known fault line, you need to find insurance that will cover you should damages arise due to these natural causes.

Update it as you go

Your policy is based on the contents of your home, and should this change, your policy should also be updated accordingly to reflect its latest status. The presence of a piano or original piece of art in your home, for instance, can increase your instalment substantially. So, if you decide to sell an item of substantial financial worth, make sure to update your policy to avoid paying for cover of an item you no longer own. When you add something, on the other hand, updating your policy is just as important, as major items (especially high-value ones) will not be covered if they are not explicitly included in your policy.

Specify your structures

Knowing which structures are covered by your policy can save you a lot of hassle and financial turmoil. Many insurance policies cover only the main dwelling structure, the home itself, and do not cover any damages to, for instance, garages, swimming pools, or lapas. Keeping your policy simple may save on instalments and may be prudent when the other structures on your property are not of high value. But when the additional structures on your property are of high value, it is usually advisable to include them in your policy.

While most home insurance policies are rather comprehensive in their cover scope, there are a few items that are most often not covered by insurers. Coverage is often limited/not granted in the following instances:

  • Most damages caused by pets.
  • Appliances used in B&B-use rooms are not covered by household insurance.
  • Theft due to the homeowner’s negligence, such as leaving a door unlocked.
  • Where damage is the result of poor maintenance.
  • Damage caused by natural occurrences that could be avoided, such as roots and weeds.
  • Any damages of theft occurring when a property has been left unoccupied for a significantly long period of time.

Home insurance may not be something you look forward to utilising, but the old proverb is highly applicable here: it’s better to have it and not need it, than need it and not have it. If you’re looking for new home insurance or want to update yours to be more comprehensive, make sure to contact us for the advice you need.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Is co-ownership the way to go?

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Property ownership is no small feat. It is one of the most reliable forms of investment and one of the biggest items that most people have on their financial “to-do” lists. Unfortunately, it is not always an easily achievable goal. Property ownership has always been a costly endeavour, and in recent years the age of first-time homeowners has been steadily increasing as younger professionals reach find their financial footing later than in previous years, making the one option that helps property buyers side-step the financial burden is co-ownership. But how beneficial is this path really?

Co-ownership is when one or more party jointly own a single property. In essence, the owners share legal ownership without having to divide the property into physical portions for their exclusive use. It is thus commonly referred to as co-ownership in undivided shares.

It is possible to agree that owners acquire the property in different shares; for instance, one person owns 70% and the other 30% of the property. The different shares can then also be recorded and registered in the title deeds by the Deeds Office.

On paper, it’s a great idea. For starters, the burden of bond repayments and maintenance costs are lessened. However, there can be problems and although not every friendship or relationship is destined to disintegrate, there does often come a time when one of the parties involved wants to sell up and move on to bigger and better things.

If ownership is given to one or more purchasers, without stipulating in what shares they acquire the property, it is legally presumed that they acquired the property in equal shares.

The risks, the benefits and the obligations that flow from the property are shared in proportion to each person’s share of ownership in the property. For instance, one of the co-owners fails to contribute his share of the finances as initially agreed, resulting in creditors such as the bank or Body Corporate taking action to recover the shortfall.

If two people own property together in undivided shares, it is advisable to enter into an agreement that will regulate their rights and obligations if they should decide to go their own separate ways.

The practical difficulties that flow from the rights and duties of co-ownership are captured by the expression communio est mater rixarum, or “co-ownership is the mother of disputes”. It is therefore important that certain remedies be made available for when the agreement the co-owners entered into does not help them solve arising disputes.

The co-ownership agreement should address the following issues:

  • In what proportion will the property be shared?
  • Who has the sole right to occupy the property?
  • Who will contribute what initial payments to acquire the property?
  • Who will contribute what amounts to the ongoing future costs and finances?
  • How will the profits or losses be split, should the property or a share be sold?
  • The sale of one party’s share must be restricted or regulated.
  • The right to draw funds out of the access bond must be regulated.
  • A breakdown of the relationship between the parties.
  • What happens in the occurrence of death or incapacity of one of the parties?
  • Dispute resolution options to be relied on before issuing summons.
  • The guidelines for the termination of the agreement.

Co-ownership can be a wonderful way in which to realise your dreams of homeownership even when your financial situation does not yet fully allow it. But it is vital that you obtain the necessary guidance and advice when entering into such a relationship to ensure a long-term, mutually beneficial experience.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Welcome to your children’s new classroom: Your home

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Since the beginning of the pandemic and the subsequent lockdowns, children have been obliged to approach their education in a whole new way, while parents have had no other choice but to become an active part of their children’s educational journey. While schools may have reopened, and children are once again filling up the classrooms, most learners are still recuperating from the disruption to their education and putting in more than ever before whether they are at home or at school. With UNICEF having already stepped in, announcing its concern over South Africa’s loss of school time, parents and learners alike have a responsibility to create adequate learner space within their homes where learning can continue unobstructed by whatever happens in the school system.

Here are some tips on how you can make your home learning-friendly.

Designated learning spaces

Lockdown or not, learners require a quiet space where they can work and study. This space should give your child a space where they can work uninterrupted, whether it is a space solely for doing homework and preparing for exams or the place that has become their new classroom. As each space should be created specifically to promote a child’s learning experience, each space must be uniquely moulded to their specific learning approach.

Of primary importance with this space is natural light, as much of it as is possible. Working under artificial light may make the work visible, but it also reminds the child that they are stuck indoors. With natural light, the learning experience just feels more natural.

Make the investment

No one works productively sitting in bed. But no one works well sitting on an uncomfortable old kitchen chair all day either. While budgets may be tight in most households, the purchase of a decent ergonomically supportive chair should be part of that budget. Most adults have the privilege of enjoying office chairs during the day, while children, rather unfairly, have to rely on seating that is far from adequate in providing support for their growing bodies. Investing in a chair that will allow them to work comfortably for longer will ensure that they make the most out of their time at their workstations.

Small bookshelves or filing solutions can also go a long way to helping them create a learning space that is geared towards an efficient learning experience. We all know how difficult it is to keep a school bag organised when it is overflowing with the textbooks and workbooks of seven subjects, so why not help your child organise their learning material.

Stock up on supplies

Having enough stationery is not a negotiable point. For high school learners, this item may be easier to comply with as their stationery is often of a less exhaustible kind. With learners in the lower grades, though, who are still learning to have fun with education while using copious amounts of Pritt and finger paint to do that, exhaustible materials may run out sooner than you think. So make sure you have enough of whatever your child needs to immerse themselves in their learning without having to stop for a refill along the way.

Minimise distractions

Distractions are different for different people, so making sure there are minimal distractions during learning time takes a unique approach for each child. The most obvious distractions may be items such as cell phones and television, but for bookworms, that copy of Life of Pi may be as tempting during math homework as Twitter is for another learner. A major distraction that many parents forget to take into account, though, is the household itself. Many daily chores, such as helping to make lunch and washing the dishes, can easily become a hindrance when parents enjoy the extra pair of helping hands around the house a little too much.

Your home can be a place where your child learns that learning can be fun, and that it should be a constant part of our lives, but that requires you to start seeing your home in a different light. If your home simply isn’t conducive to your child’s learning experience, it may be time to think about some renovations or even reconsider where you are staying and begin the search for a learning-friendly environment.

Whatever your property needs, though, we are here to help you make the most of your next step.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

The current state of the rental market

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While restaurants, shopping malls and beaches may look somewhat similar to what they did before the pandemic, nevermind lockdown regulations and social distancing protocols, the real estate rental market has not recovered quite as well as the consumer market.

Studies conducted by the TPN Credit Bureau have indicated that, at the start of the hard lockdown of 2020, only half of short-term credit accounts were paid in “current” terms. Already in the third quarter of 2020, the repayment of credit accounts had increased to 70%. The rental market has not been so fortunate in its recovery.

Due to job losses and increasing financial insecurity, the prospect of defaulting on rental payments has become an ominously looming possibility for many tenants. However, TPN’s research has indicated that the number of tenants more than three months in arrears is steadily declining, thanks in part to the rental relief that was provided by numerous landlords when tenants’ financial situations were in dire need of every cent that could be spared. While tenant payment has increased greatly since the third quarter of 2020, it seems as if it was an improvement that levelled out in 2021.

When looking at the section of the market that is still most affected by non-payment, it is unfortunate that it proves to be properties with a rent of under R7 000, which is commonly considered the more affordable market. With the under-R3 000 market, only 65.73% of tenants are currently in good standing according to statistics. This is a clear indication that the tenants struggling the most with rent are also those who have felt the impact most due to lesser wealth.

Research makes it clear that there are numerous tenants who are more than six months in arrears still occupying properties, placing landlords in an increasingly difficult predicament. The unfortunate reality is that where mediation was previously possible, the employment circumstances of many tenants are unlikely to change soon, making mediation a redundant process. The last resort left to landlords thus becomes a court-ordered eviction. However, evicting long-term delinquent tenants who have invertedly become squatters is a costly and drawn-out process. Once a landlord’s legal counsel has advised them on the avenues of legal action available to them within eviction law and the state of disaster regulations, the difficulty of securing a court date makes a court-ordered eviction a problematic solution, to say the least.

When it comes to squatting tenants and evictions, landlords also have to keep in mind that they may not hinder a tenant’s ability to reasonably occupy the property, even if they are in arrears on rent. The law prohibits landlords from activities such as removing doors, cutting off electricity, or changing the locks of the doors – activities certain landlords have previously resorted to in hopes of making the occupation of the property so unbearable that the squatting tenants would leave on their own.

The fear of non-payment has become one of the greatest concerns for landlords in general, leaving many landlords preferring a temporarily vacant property over risking tenants who will end up in arrears and the possibility of squatting. As proof of this, the statistics show that while the national vacancy rate has stabilised at 13.5% in the second quarter of 2021, areas such as Sandton still show a vacancy rate of above 20%.

Hopefully the rental market will mirror the improved activity and regained sense of normalcy of the consumer market and continue to stabilise as 2021 heads into its final quarter. One silver lining around this cloud is that you are not alone. Whether you have further questions regarding tenants falling into arrears or want advice regarding your vacant rental property, our property experts are here to help you on your journey.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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