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Property 24/10 - 549
22 April 2021 00:00
This week on Property24.com: Tenant rights when cancelling a lease due to retrenchment; SA homeowners to prepare for 'bigger than usual' municipal rates increase; and is your information officer ready for POPI compliance?
A look at SA's 2021 expected rate hikes and why sellers are 'dropping asking prices by 10%'
South Africa's property market's resilience in the face of the global Covid-19 pandemic continues, with industry experts expecting rates to remain unchanged for the remainder of the year, benefiting low-value homeowners looking to upgrade. However, analysis shows the historically low-interest rate's impact on the market is starting to cool.
After the five aggressive repo rate cuts last year that dropped the prime lending rate to a historic low of 7%, homeowners and aspirant buyers have been holding their breath, waiting for the pendulum to swing the other way in 2021. But expert predictions suggest that interest rates will remain low for a while yet, with the first significant hike only expected next year.
“While the current favourable lending environment has resulted in a massive surge in buyer activity, with BetterBond reporting a 24% increase in bond applications volumes for March, year-on-year, consumers must look at projections for the next three years so that they can plan and budget accordingly,” says Carl Coetzee, CEO of BetterBond. “Now may well be the best time to bond, but homeowners also need to be prepared for what happens when interest rates increase again.”
FNB’s senior economist, Siphamandla Mkhwanazi, argues that there may well be a good few months still to apply for a bond at the current low prime lending rate, suggesting that the rate’s cycle outlook may be even rosier than initially expected. “The South African Reserve Bank’s (SARB) Quarterly Projection Model’s (QPM) implied policy rate path is for a cumulative policy rate increase of 50bps this year: 25bps in the second quarter of 2021 and another 25bps in the fourth quarter. We however do not see the second quarter’s QPM’s policy rate increase materialising, and we believe the Monetary Policy Committee (MPC) will delay the fourth quarter policy rate increase envisaged by the QPM and will likely only start to hike interest rates, albeit within limits, in 2022.”
SA homeowners to prepare for 'bigger than usual' municipal rates increase
Record fuel price increases are grabbing headlines at the moment, but home sellers should be even more concerned about the increases in municipal tariffs that will be implemented in just a few months’ time.
This is according to the study Decoding Global Ways of Working, conducted by the Boston Consulting Group (BCG) and The Network, including local partner organisation CareerJunction. It involved some 209,000 participants in 190 countries and 1,421 in South Africa.
The decline in South Africans wanting to emigrate is in line with the global trend of decreasing mobility – which is likely due to the pandemic induced tighter immigration and less welcoming policies in certain big destination, says Rudi van Blerk, principal and recruiting director at Boston Consulting Group, Johannesburg.
“These are set to be bigger than usual this year,” says Gerhard Kotzé, MD of the RealNet estate agency group, “and could substantially increase your holding costs as a seller if your property is not priced correctly and takes a long time to sell.”
Citing research by the South African Cities Network (SACN), the average municipal bill for the four main household types in nine major municipalities in SA (Buffalo City, Cape Town, Ekurhuleni, eThekwini, Johannesburg, Mangaung, Msunduzi, Nelson Mandela Bay and Tshwane) ranges from R1 425pm for low-income households, up to R6 119pm for high-income households.
Tenant Rights | Cancelling your fixed-term lease when you've been retrenched
There has been a dramatic increase in the number of retrenchments brought on by the economic effects of the COVID-19 pandemic. What are the legal implications if you have to cancel your lease?
“Sadly, the latest official unemployment rate stands at 32.5%,” says Paul Stevens, CEO of Just Property. “As a real estate company with probably South Africa’s largest rental division, we have certainly seen an increase in the number of tenants cancelling their lease agreements before term as a result of financial hardship.”
Clina Steyn, Managing Director of SSLR Incorporated, notes that the early cancellation of a lease agreement is regulated by legislation, specifically the Consumer Protection Act and the Rental Housing Act.
“If a tenant wishes to end a fixed-term lease agreement during the fixed term, this constitutes a cancellation in terms of Section 14 of the Consumer Protection Act,” Steyn explains. “The tenant (as the consumer) is allowed to cancel the fixed-term agreement by giving the landlord (the supplier) 20 business days’ notice. The landlord has the right to claim a reasonable cancellation penalty from the tenant. Even if the lease agreement is silent on this, the landlord may claim the full damages suffered within certain legal limitations,” Steyn notes.
POPI compliance | Is your information officer ready?
In the Pandemic-hit era of Covid-19, more and more of us are switching on to the digital way of life. The Protection of Personal Information Act, No. 4 of 2013 (POPI Act) is now in operation, effective since 1 July 2020, following a lengthy process which started in 2013.
The core focus of the act is to ensure the sharing and use of personal information is done correctly and for the purposes intended, so as to protect the privacy and rights of those individuals who are sharing their information with companies and organisations.
While the act is now a legal obligation, penalties for non-compliance are enforceable from July 2021. It is also important to note that these penalties do not apply retroactively.
A key requirement of the POPI Act is the appointment of an Information Officer for your organisation. According to Bregmans Attorneys, the Protection of Personal of Personal Information Act, 2013 (“POPIA”) requires entities have an active Information Officer, defining the appointment of role according to Section 1 of POPIA as follows: