Good news for South Africans who want to sell their homes

For homeowners who want to move but are struggling to sell their property, renting out their homes is a good way to generate extra income, achieve a higher selling price, or permanently boost their investment portfolio.

The Seeff Property Group recently explained that renting out your property is an excellent option if you need to move but cannot wait for the sale to happen.

There are times when a seller may prefer to wait for a particular price and then choose to rent the property out in the meantime.

Selling a property can take months, which could put a strain on homeowners who need to cover the cost of relocating.

Data from Lightstone shows that the average time a property in Joburg spends on the market has increased from 79 days in 2019 to 97 days in 2024.

Homes in Joburg’s “Super Luxury Areas” have the hardest time being sold and have spent the most time on the market every year from 2019 to 2024.

Lighstone also looked at Cape Town’s property market, and although property in Cape Town sold faster than in Johannesburg, some suburbs struggled more than others.

“Fish Hoek and Muizenberg are near neighbours along the False Bay coast, yet the time it took, on average, to sell a house in each of the suburbs in 2024 was worlds apart,” Lighstone said.

Houses in Fish Hoek moved the fastest and took just under 53 days on the market to sell. This was followed by Durbanville and Brackenfell, which both sold in under 60 days.

However, sellers in Muizenberg, which is close to Fish Hoek, averaged just over 100 days to move their property.

Despite the difference, both Fish Hoek and Muizenberg recorded sales close to the listing price, with Fish Hoek at 93% and Muizenberg at 94%.

Noordhoek struggled on both counts. It spent the second-longest time on the market following listing, and sales were, on average, 85% of the listing price.

The graphs below demonstrate how time on the market differs between Johannesburg and Cape Town town over the period 2015-2023.

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Renting your home

The Seeff group explained that renting out your home has pros and cons, and it depends on the seller’s needs.

The upside is that the seller could move sooner and earn a rental income while waiting for the property to be sold.

This might be particularly suitable if the seller has already purchased another property and is financially secure enough to retain the property.

If the property has a mortgage bond, the rental income can be offset against the repayments, helping to pay off the property.

If the property is already fully paid, the extra cash can supplement your income, but you will need to make provision for maintenance and other costs, such as property taxes, which the landlord usually bears.

Holding onto the property also gives you more time to consider whether you want to sell or keep it as a rental investment. It might, for example, be that the market is not particularly favourable to secure the price you want for the property.

Therefore, holding onto it allows you to wait for a better market while you continue earning an income.

The renting process may work out so well that you decide to retain the property as a rental investment and start building a property investment portfolio.

This could be particularly beneficial if the property is located in a high-demand rental area and there is strong demand for the particular type of property.

Data from ooba revealed that national demand for investment or buy-to-rent properties reached 13.9% of total applications nationally in Q4 2024, up from 11.8% in Q4 2023.

The Western Cape is leading the charge with this trend, as the region accounts for a significant portion of investment property transactions.

The province has emerged as a hotspot for investment buyers. In the final quarter of 2024, 34% of all bond applications received by ooba in the region were for investment properties, a notable spike compared to 29% for the same period the previous year.

The Eastern Cape also registered strong growth in investment demand during the final quarter of 2024, rising from 14% of all applications in Q3 2024 to 18% in Q4 2024.

While your property is being rented out, provided it is well maintained, Seeff said it will continue to grow in value. Property is also among the best assets to use as security for business or other financing needs.

Potential downsides

Rather than standing vacant, an occupied property also provides better security, the Seeff group noted. It might also stand a better chance of selling as buyers often prefer to see the property fully furnished.

The tenant should also keep the property clean and the garden maintained, or you could retain a gardening service.

A downside risk might be that you could, at times, struggle to find a tenant, and the property could be vacant if it is not in a high-demand area, an area which depends on seasonal demand, or if the price is at the upper end of the price scale.

Limited stock and sustained demand are always mitigating factors.

If you don’t live near the property, it might also be challenging to monitor it.

Samuel Seeff, chairman of the Seeff Property Group, said the best advice would be to appoint a good rental agent who can keep the property occupied with a good tenant who looks after the property and manages it on your behalf.

There may also be financial implications. In addition to property taxes, there would be added maintenance costs for cleaning or painting before a new tenant takes occupation.

There will likely also be tax implications as income earned must be declared, but maintenance and marketing expenses can be deducted.

If there is a mortgage loan on the property, and it stands vacant for a period with no rental income, then you would also need to be in a financial position to fund that.

If you are still keen on selling the property, the agent can continue marketing it until a suitable offer is received. In the meantime, the seller will have benefited from earning a rental return on the property.