 And specifically looking at the current interest rate hike, you know, and with the lack of affordability in South Africa and specifically also The rental market, what are some of the impacts or the things that are happening because of this? So you started off with some really good tips around understanding affordability It is to consider your moving cost, but also considering your deposit what your cash flow looks like What is happening inside the South Africa's rental housing market in a world where being a mister know it all can land you in the red? We'd rather keep you in the north. I'm talking facts the latest updates and the hottest property news You will hear it here first From the industry's top minds. This is the private property podcast. I'm doing welcome Congratulations to our winner glad she render for winning yesterday's 500 grand cash prize Be like glad and join the conversation on Facebook so that you can win that 500 grand cash So you found your dream apartment and you were wondering what can I do to ensure that I don't? Make this dream into a nightmare before you pop that bottle of champagne We've got property no-no's to make sure that you don't land up in hot water So here they go number one skimming through your lease You definitely don't want to do that because you are going to initial every page Number two overlooking utilities and amenities Number three taking on a repair costs. You definitely don't want to do that if you didn't break it don't fix it Number four investing in expensive furniture too early Number five neglecting moving costs But online when you are looking for an apartment do your research watch out for those for these property No-no's so that you can make a good decision. You will definitely thank us later Our guest tonight on the show has over 14 years of experience as a consumer and marketing executive He's deeply committed to the use of cost industry skills Knowledge and expertise to ensure business growth and innovation He also knows a thing or two about credit and the rental housing market Viewers at home help me welcome the head of marketing and sales at TPN credit guru Valdu Marcus Valdu Good evening, and thank you so much for joining us. Good evening to me and thank you for that kind introduction It's a great to be with to join you in studio. Thank you so much Let's jump right into our conversation tonight and tell us on a day-to-day How does your day look and what are some of the things that you get to do as the head of marketing? And and and so I'm a credit bureau. There's the day is never the same We've we focus on key things to ensure that both landlord and tenant is protected from a compliance perspective And then of course we also our core businesses to collect rental payment behavior across the industry And it's from a small landlord and with a single tenant all the way to listed property funds on the JSE and how those tenants but both on a Commercial but also on a residential pay Their rental that's of course great. It gives us great insights into the sector in terms of escalations vacancies and of course trains to help the industry as a whole to make better decisions Sure, and you know, we are talking about the the different Things that are happening right now in the industry and specifically looking at the current interest rates You know and with the lack of affordability in South Africa and specifically also The rental market. What are some of the impacts or the things that are happening because of this? So you started off with some really good tips around understanding affordability It is to consider your moving cost, but also considering your deposit what your cash flow looks like What's what we've seen in the in the property sector, especially within the residential market is COVID has really brought on some de-escalations Effectively meaning rent year on here has become slightly cheaper. However the last quarter of 2021 and we expecting it to continue is that we're going to see escalations to increase now the interest rates are increased Because of inflation and we've seen inflation creeping up to five point nine percent What does that mean is that escalations will soon follow within the residential a rental market and Further to that as we already seeing that the property inflation therefore should you be interested in buying is already broke a broke the five percent mark so Considering that's affordability one and also how we we expecting salaries to increase Just around CPI is that affordability tip is critical to ensure that you move into the right property Yeah, no definitely and you know a couple of months ago the Finance Minister of South Africa gave us the budget speech and we know that there's going to be changes there And even in the consumer market talk to us a little bit more what this means for someone who's got a short term these a long term These are they any nips in the back that they can start doing now to make sure that they don't you know get adversely affected by this Well, it is it's such a difficult one. I think Understanding what is your core expenses if we look at the general South African They spending almost 80% of their salaries by the seventh of each month Top of that list is either a bond repayment or it is your rental payment Then second to that is of course transport food medical etc So it leaves very little space should we start seeing a jump in Short-term loans credit card interest and we've seen the last 50 basis points really gonna make an impact on the Pockets of South Africans. So yet again, when you look at short-term Credit be very careful. It's going to become more and more expensive in the short run And we expect that to continue all the way to the end of the year So be very very careful before you overextend yourself Try and save as much as possible where you can the one upside about covert and the hybrid working model is You might not always have to travel into work. We've seen the petrol price It's expected to increase even more So consider maybe working from home a couple of days and that will save you some travel travel cost And that you can invest again into your residential property Remember to talk to us on the Facebook feed send us those questions comments send this conversation to anybody You think will benefit from hearing what we're talking about tonight's the conversation tonight is about anybody who's in the Who's in the property industry if you are a tenant if you are somebody who is a landlord and you are thinking about some of these things and Looking at him even renting your property out. These are good insights that you need to know Coming back to the conversation. Let's let's bring it back and talk about taxpayers and some of these affordability Things that they can they can do in terms of Easing, you know the concerns and even allowing them to to to do a little bit more with their money or allowing They are back to go a little bit further Are there any implications that came from the budget speech that could help someone who is currently in the rental market? I think the key highlights from the finance minister was that we didn't see an increase in personal tax And that is really to stimulate the economy people can spend more and that was due to the better commodity Taxes that was received and then we've seen the finance minister really helping the commercial property market by not increasing commercial tax and That is due to the bad performance. Of course, it is recovering and it's recovering relatively Quickly compared to what we expected So it is really the finance minister had a very good balance between save saying let's put ensure that we don't take any More money away from the consumers and then also helping businesses to hopefully use that money to increase jobs That is key to me. We can't labor it enough. We need to see more jobs created in this economy Interesting we saw status a is that we've seen a decrease in full-time employment Part-time employment however has seen an increase. So the way we earn a living has is also changing in our economy And again for a landlord for instance Consider that when you take on a tenant, it's not just about full-time employment. It is also about Total income that they receive as people have to make Plans to of course earn a living Sure, and let's let's talk a little bit more about people who are already in the market And maybe someone is living in a house and they are they are starting to anticipate that they might not be able to keep up with their rental amounts Are there any specific things that they could do for them not to end up landing up in the red? You know because I think the best thing about it is that we can we can try to be preventative in our approach because the moment You are in the red It's both a disadvantage to the person who is a tenant and a landlord So is there any advice for these two categories of players in the industry now of things they could do to help them? push this forward We always say communication as soon as you discover that there is a challenge the key focus is To please reach out to your landlord start communicated to them tell them what the situation is and Be open and honest, you know most most landlords do not want to lose a good tenant So if you've paid well, and you've maintained the building and you've looked after it and you adhere to the rules and regulations Most landlords will be open to say all right. What can we do to ensure rental comes through? It is our ever also important to understand the landlord's perspective. There's usually bonds to be repaid rates taxes electricity water So it might not be that you pay on the first of every month, but please communicate clearly so that it also does not affect your Credit rating within TPN because should you then decide to move to another? property The new landlord will of course see how you've paid and how you've behaved in your pimp rental payment behaviors Sure. I like the fact that you were bringing TPN in and This track record coming in how much does it impact when one wants to move out of the rental space? and maybe even go into acquiring property because Situations and circumstances of people are very different Some people are renting while their property owners because it's whether it's cheaper or they're doing it for investments and all of those scenarios, what would you say? They could do in order for them to either if they already in the case where They are their name has already been listed or they took to keep the process from not happening What what would you say for those two? So we collect payment behavior and it stretches back up to five years We all have to face the reality of covert and in covert people fell behind on payments due to lack of salaries Salary freezes So when a landlord and we run quite a lot of training and education around it is to say when you look at a new tenant Don't just look at the past six months or 18 months. Look at the entire track record of that individual If they completely paid their rental on time every month for Two years prior to the pandemic, then you know, it's an isolated incident. See how quickly they recovered From a purchasing bond behavior the rental payment behaviors in South Africa. That's that we collect it started to be used as a risk model across various commercial banks and the reason for that is a lot of people pay their bonds or their rental first So it's one of the best ways to understand the importance of Maintaining a roof over your head. So in this case when when Landlords or people are looking at extend or buying additional property and they're looking at taking out bonds Etc. How you pay rental comes up But also how your tenant with inner property has paid to ensure that you receive the cash in and on time Sure Remember to send us your questions right here on the Facebook feed so that we can Field them there is a question that came through and it's specifically about vetting and I'm sure I hope that we can we can Actually tackle it tonight and and of course Valdez to the best of your ability it's saying hope this this hasn't been addressed yet it's it's coming from annele and They say how does one go about vetting the agents they are about to deal with the e the e a a b Is always very vague about getting information on the legitimacy of estate agents right so the ppr a came into effect this this year and Within that there's a bunch of new regulations that your estate agents have to adhere to for instance It was at the end of August is now moved forward to the to June that estate agents must be registered and have a ffc And of course that the principal needs to be an NQF five meaning that they are extensively trained in the in the legal environment Above and beyond that there's additional regulations of course to get the ffc so when you Decide on choosing an agent make sure that they are registered with the ppr a make sure that they are registered The ppa and you have the right to ask for those for the proof Sure, I'll take you a little bit back there and just for first time as somebody who's joining us for the first time Can you just take us through the acronyms the ppr a and some of the other ones mentioned so the ppr is the property practitioners act and ppr is a property practitioner property professional and then the ppr a replaced the estate agency affairs board or the acronym for that is the e a a b So the property practice practitioner regulatory authority replaced the estate agency affairs board. So they basically are Mandated to regulate property professionals and the definition has extended beyond just residential Estate agents is now including commercial brokers. So if you deal with a commercial broker They now also have to be registered with the property practitioner real regulatory authority Thank you so much for that and if you just joined us We are still talking the rental the rental housing market and non-pomele loan services I can relate to most of these points and I'm now gaining insightful information Remember you do stand a chance to win 500 grand cash for interacting with us in our comment section Well, do I will now bring our conversation to something that is that is really a life-long argument in in the property space where people talk about renting versus buying and they talk about how the expenses and the Maintenance expenses. What is your take and what advice would you have for somebody who currently is renting or would like to Maybe buy or is just new and a novice in the property industry and is thinking about which one to go for what advice would you have for them? Well, at the end is it ultimately boils down to your affordability But also what is your long-term or medium-term strategy in terms of wealth creation property has historically been a very good way to create wealth And that's two-part one. Yes, you can show a rental return or an income passive income through or partially passive income Of course, you know landlords do have to fulfill certain obligations But there's a partial way There's a partial passive income that you can generate from a rental property on the other side Although even though if you take out a bond to purchase it, it's a forced way of saving So after the five ten fifteen years, you've actually acquired an asset that traditionally Appreciates in value. So with those two things in mind is understand What is your medium and long-term concept if you've been a really good tenant for the past five six seven years? And you look at your affordability. There's always ways on private property to go and calculate. What is what can you afford? So what is your monthly installments based on the interest rates? But please consider the the rates and taxes levies if it's applicable Maintenance, do you want to go into a freestanding which of course might not incur the high levies? But it does come with additional security costs. It might come with additional insurance costs maintenance Slightly higher if you do it on your own versus if you work within a body corporate That will give you an idea of what your budget is and what you can afford and then go and find the right location I think to lean into it is Understanding the right location some areas we've seen a decline in property values For the past ten fifteen years and then there's areas. We've seen some incredible property capital growth That means what you bought the property for five years ago Versus if you sell it now what that value is and we run some analytics and that's usually available to one of our reports to show What are the capital growth is what the kind of rental income is that you can get? So it's really about understanding what your strategy is and then decide the way forward and then of course affordability and Understanding there's hidden cost do some research understand what it is rates and taxes in the area That in itself rates Please make sure you can find that out from your local government understand what those rates are and make sure that you provide for above inflation increase The same with utilities water and electricity It has been increasing the past couple of years above inflation So when you do a take in CPI plus two or three percent add that to your monthly bill and see if you can afford it Definitely, and I think Important takeaways from that is affordability Are you able to afford all the expenses that come with either renting or or buying to live in? So it's very important that you think about that and some comments are coming through and Kamukhello Ororesing is saying I love how we are tackling the different Information and topics on property and thank you so much for joining us Kamukhello It is an absolute pleasure to be bringing you on the past topics about property every single night Before I round up our conversation tonight, let's talk about the impacts of COVID-19 You spoke a little bit about them in terms of sometimes these things being isolated incidents and I really I really Like the fact that we looked at it like that because it COVID-19 was a bit unexpected and it shook so many people's world and Unfortunately, it has had an impact even on rental income for for a lot of people a lot of A lot of landlords are standing with vacant properties because people just couldn't afford them and left, you know And let's talk about it in terms of what are some of those things that we can actively do whether as someone someone who's Agent an agent someone who is tenant or even a landlord What are some of those things we can actively do to make sure that we recover from COVID-19 and we we start changing the way things are So I think the reality is that we're starting to see that The economic shocks both Nationally and globally is coming in hard and fast. We we dealt with COVID and we dealt with it In a very decisive way We did see a huge impact on our labor market and within the residential property market We saw where our good standing attendance and good standing of like 81 82 percent Dropped to just above the 72 percent mark So we could definitely see that people were struggling now We back up and just just over the 80 percent mark So we almost back to where we were prep COVID of course rentals are slightly lower in some areas of vacancies are slightly higher We could definitely could see the the change in in escalations what landlords used to get versus what they're getting now So that was the first economic shock we're dealing with now currently we're dealing with the economic shock That is imported inflation from the northern hemisphere that was brought on due to the conflict in Ukraine but also the overheated economies of the northern hemisphere which Increased huge amount of simulation during covert that means we bring in a huge amount of inflation through our fuel imports International imports and that ultimately filters down to the consumer. So we have to brace ourselves and understand that these Economic shocks are not completely over. We've dealt with covert and although it's not completely over You know, we've learned to live with it And as the residential market is recovering in that regard and we see it even within the commercial market the recovery is there It's not to understand. What is the right price and landlords might not necessarily like to hear this But sometimes it is to keep your rental at the same level but keep a good tenant At least you get the right cash coming you get your cash flow is still healthy and you get the rental money coming in on time So those are a couple of considerations. So when you then as a landlord look at a tenant is understand that How important is it to get your rental on time versus a one or two percent increase in in rental? And of course as I said escalations have been lagging and there's a bit of catch up to do The cost of maintenance repairs Utilities which for the past couple of years landlords have absorbed At some point that needs to be passed on to the tenants although we expect it to be done more evenly and it's not a sharp increase Thank you so much for that insightful conversation And thank you for taking our time to talk to us and we really really appreciate it and have a great night Thank you. Well, thanks for that to me And to the rest of you at home Thank you so much for joining in on Facebook. We have a winner and we are telling that up and Thank you for showing us love and for commenting and interacting with us We love doing this each and every weekday and the drum roll can come in as I announced the winner of the 500 grand prize for the most interaction is the person is Thank you so much no Puma drop us an inbox to claim your prize and join us again tomorrow for another night of an Insight packed episode. Don't forget to also like and subscribe to all our social media platforms Thank you so much for joining us on the private property podcast. My name is do me and have a good night