Renting or buying your first property

Time to leave the nest? Ready for your first rental or property purchase? Seeff gives some advice.

There are few things more exciting for young people than the prospect of finally moving into their own flat or home, whether renting or taking the big step of purchasing.

While exciting, it is a big step and comes with considerable financial implications and obligations.

Renting your first property

The first thing to know about renting your first property, is that you will need to be financially able to afford the rental. You will need a clear credit record and three months’ banks statements which show sufficient money paid in to cover the monthly rental. Generally speaking, your monthly earnings need to be around three times the monthly rental. A secure job is usually a prerequisite if you are taking the rental in your own name.

The next step, is to ensure that you have enough funds to cover the rental deposit which could be up to two times the monthly rental plus any additional administrative costs charged for the credit clearance and drawing up of the lease.

The next step would be to sign a lease agreement for the period of the rental. This document sets out all the rights and obligations of both parties and new renters need to pay careful attention to any special provision such as those that may apply to your conduct in a sectional title property.

Before taking occupation, you should ensure that a thorough incoming inspection is done together with the rental agent or landlord and ensure that this is in writing and attached to the lease agreement. The lease is a legal document and you are bound to fulfil the contract to its conclusion.

This means paying your monthly rent in full, looking after the property and maintaining it in the condition that you received it, and importantly, that you conduct yourself in an orderly manner throughout your tenure. As mentioned, if in a sectional title property, you need to ensure you receive a copy of the Scheme Conduct Rules and keep to these.

Purchasing your first property

Again, the point of departure will be affordability and this will be a factor of your income. You would need to earn enough to cover the monthly bond amount by a factor of at least three times. Again, a stable monthly income will need to be proven by way of three months’ bank statements. In some instances, the banks may have additional requirements.

The next important aspect, is to have enough cash available should you need to pay a deposit towards the purchase price. Additionally, there will be transaction costs payable if the property price is above R900,000 as well as attorneys’ and bond registration fees.

You may also want to make upgrades and enhancements that need to be budgeted for. Additionally, you will need to pay deposits for basic service connections and other matters related to taking occupation.

Whether you are looking to rent or buy, it is advisable that you do your homework on the area beforehand. Spend some time there, visit restaurants and chat to locals to ensure it is the right area for you. Check if the area meets your lifestyle needs in terms of schools and so on.

You should also check access to main roads and arterials necessary to get to work as well as how long the daily commute will take.

It is also important to be honest about your budget and needs so as to ensure that you rent or buy a property that fits with this. Be conservative and rather rent or buy below your means.

Buying a property is a big decision with significant financial consequences, so be sure to do it right.

Author: Gina Meintjes