Letting your home in 2010: Beware!

09/01/2010 at 16:07 3 comments

Planning to rent out your house, flat, apartment, cottage, mobile home, beach house or villa in Cape Town during the 2010 FIFA World Cup – which takes place in South Africa in June / July 2010? Do you also plan to make a small fortune by doing so? Everyone in South Africa remembers the media reports of an international celebrity who has forked out $1 million to rent a a Clifton crash pad during entire event. Well, think again.

If it is up to tourist authorities, rental agencies, the South African Revenue Service (SARS), and property managers you will not be able to demand exorbitant prices for your humble home. The Tax man for instance warns property owners with dollar signs in their eyes that they could face a hefty tax bill in the new tax year from renting out their homes. The higher the rent they demand, the higher the final bill will be. This could even push taxpayers into higher income brackets, resulting in more income being taxed at the highest marginal rate of 42 percent.

Letting agents have said that many home owners who rent pout their property for short-term and long-term leases, have taken their homes off the property rental market in order to rent them out during the 2010 FIFA World Cup. WE are talking about people owning property in seaside suburbs like Clifton, Camps Bay, Llandudno and Three Anchor Bay, but also faraway places such as Durban Ville (±25 minutes drive from Cape Town’s city centre). Many people in those faraway places also assume they would be able to let their homes for R3 000 a day and more.
Emarie Campbell, 2010 co-ordinator for Seeff estate agents, warned that this was simply not the case. “People think that this is the big pot of gold, but it’s not going to happen. There are no guarantees,” she said in a local newspaper.

“Tour operators putting packages together are looking at realistic prices and value for money. If greed takes over the business transaction won’t happen.”

Andrew Collins, the owner of Just Letting in central Cape Town, said owners should also consider what would happen after the World Cup. “This is a very real worry. If thousands of visitors do indeed rent properties for June and July, there will be a huge influx of stock for August. Any landlord planning to rent out his property needs to take this into account and factor in a couple of months where no rent is earned”, he said.

But there were properties that were worth letting. “Remember, people are looking for properties similar to hotel accommodation. They don’t want to sit and look at photographs of someone’s grandmother, for instance.”

Source: Cape Argus

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