World Cup 2010 and Rental Demands

Property owners hoping to make a fortune letting their homes during the World Cup should be aware of the pitfalls, warn letting agents.

And the South African Revenue Service says owners could face a hefty tax bill in the new tax year from rents.

These could even push taxpayers into higher income brackets, resulting in more income being taxed at the highest marginal rate of 42 percent.

A financial magazine reported that Cape Town had a shortage of rental properties available on six-to-12-month leases, as owners were taking their properties off the market, hoping to let them to tourists in June and July.

These were not just owners of seaside properties, but residents of areas a good way from Green Point, such as Durbanville and Parow, who assumed 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."

The agency had received many inquiries after the final draw, especially for Gauteng where most of the matches were being played.

She attended a tourism exhibition in the UK recently, where tour operators spelt out what they were looking for.

Capetonians with property in places like the Blouberg beachfront were ideally placed.

"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."

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."

The majority of visitors would prefer to find accommodation around Johannesburg because six of the 10 stadiums were relatively nearby.

Visitors to Cape Town would select high-standard properties close to the stadium, fan parks and nightlife and have good views. The preferred areas will be the Atlantic seaboard, City Bowl and Blouberg. The southern suburbs offer upmarket homes that would appeal to the top-end visitors.

Adrian Goslett, assistant regional director of RE/MAX Southern Africa, said owners needed to ensure that they had covered themselves against liability and not just damages to property. They needed indemnity against accidental injury or worse to guests.

"Owners must ask themselves what size deposit will they take for potential damages? What payment facilities do you have? Many guests will want to pay by Visa or Mastercard. How will you transport your guest if you are not near a taxi service?"

He warned owners not to get swept up by the euphoria of the World Cup and spend unnecessary money on upgrading or changing their property without doing their homework. "Certainly places like Green Point, Sea Point and surrounds will attract interest because of their prime proximity to the stadium and the city. I would take a solid long-term rental client over a holiday let any time."

o This article was originally published on page 6 of Cape Argus on January 09, 2010