Real Estate Investor Magazine South Africa April 2015 | Page 30

FINANCE

Buy-to-let Rental Income

Bank guidelines for utilising rental income
BY MEYER DE WAAL

• Will utilise the full rental if property un-bonded or bonded to Standard Bank.
• Will only utilise the net rental income (ie. The difference between bond instalment and
rental income, if the property is bonded to another financial institution.)
• In cases of un-bonded property, proof of ownership (For example, a copy of the title deed)
to be provided.
• In cases of property bonded to another financial institution, a rental schedule which
reflects the purchase price to be provided.
• Three months bank statements reflecting received monthly rental payments received and
a copy of the lease agreement to be provided
• Will not utilise future rental income

• Where rental income is used as a source of repayment of the loan, proof of lease
agreements or proof (rental deposits into the lessor’s banking account) that the rent has
been paid for the last six months will be required.
• Should the remaining term of the lease agreement be less than 12 months, only 50% of
the rental value will be added to the applicant’s income and 100% if the remaining term
of the lease is in excess of 12 months.
• As soon as rental income is included for affordability purposes – the max LTV will be 85%
• Will utilise future rental income which will be calculated as follows:
Purchase Price R350 000 – R1.5 million:
Purchase Price/Valuation x 1% x 0.4 = rental income
Purchase Price greater than R1.5 million:
Purchase Price/Valuation x 1% x 0.3 = rental income

• Will only consider utilising rental income if property un-bonded or bonded to FNB and
rental income supported by lease agreement and 3 months bank statements.
• Will utilise 50% of net rental income
• Net rental income is calculated as follows:
Gross rental per lease agreement
Less: Bond instalment (if property is bonded)
Less: Property rates and taxes
= Net Rental Income
Less: 30% income tax provision

= Total net rental income available to include in total income declared on bond application
• Will not utilise future rental income

• Will utilise 40% of rental income provided rental income is supported by a lease
agreement and three months of bank statements.
• Will utilise 40% of future rental income provided there is a lease agreement in place and
a copy of the agreement was supplied.

RESOURCES
My Bond Fitness, Standard Bank, ABSA Bank, First
National Bank (FNB), Nedbank
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April 2015 SA Real Estate Investor

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