Real Estate Investor October 2020 October/November 2020 - Page 46
Convenience meets security
A spike in gated estates
T he rise of gated communities has not only been prolific in the Western world but also in countries like Egypt , Turkey , Russia , as well as South Africa . Here , they meet the need not only for a sense of neighbourhood connectivity , but also for convenience , privacy , security , and even proof of status that overcrowded cities no longer provide .
According to New World Wealth , South Africa is a global pioneer of residential estates , with frequent research suggesting a shift from the traditional golf estates towards lifestyle estates . Despite a general market slowdown due to both the COVID-19 pandemic and challenging economic conditions , estates are still proving to be popular home choices for South Africans . In fact , the country ranks second only to the United States in respect of the number of these residential developments that offer every conceivable convenience .
The Amdec Group ’ s multi-generational estate Westbrook , in Port Elizabeth , is just one such example , catering to multiple generations in one secure estate . It is a safe , walkable precinct that will comprise 3 500 residential homes spread across nine residential villages , along with a “ town square ” set to feature a variety of commercial and retail spaces . A medical centre is also on the cards .
Clifford Oosthuizen , managing director of this gated community , says the vision is to construct new urban spaces that will redefine city living . He shares some of the reasons he sees for people making this lifestyle their home of choice .
Safety and security top the list
Rising safety and security concerns amongst South Africans are influencing where people want to live and drive the increasing demand for homes in security estates . The most recent crime report statistics revealed that 21 130 robberies occurred at residential homes between April 2019 and March 2020 .
For this reason alone , buyers are opting for security estate living that offers 24-hour security access control , response vehicles for perimeter monitoring , along with security cameras that pan the entire complex giving residents peace of mind .
18 OCTOBER / NOVEMBER 2020 SA Real Estate Investor Magazine
SERIES PART 6
How to work with
a management or
Sean Thomson, property investment coach
at Wealth Trek, explains how to work with
management or letting agents in the United
Kingdom, and what this is likely to cost.
n the fifth article in this series, we looked how to refurbish
property at a distance, along with how to identify, work
with and remunerate reliable project managers. Our sixth
article explains how to find a tenant for your property by
working with a management or letting agent. Such agents
vet your tenants and help you to find the right tenant for
your property. We will also look at the associated costs, as
well as how to evict a tenant. You will be pleased to know
that tenancy law sides very much with the landlord in the
Pursuing a cashflow strategy in the United Kingdom
will involve tenanting properties. As a South African,
you will likely be investing from a distance, so it is best to
work with a UK management or letting agent. To ensure
you are working with the right agent, I would suggest
checking which professional bodies they are affiliated with.
These professional bodies claim to promote the highest
standards and members must work within stipulated
regulatory frameworks. Examples of these bodies include
the Association of Residential Letting Agents (ARLA) and
the National Association of Estate Agents (NAEA). ARLA
and NAEA members follow a robust Code of Practice, which
covers the key stages of letting and managing a property.
Of course, affiliation to these bodies does not necessarily
guarantee a good letting agent. On our Discovery Series, we
go into more depth to ensure that you work with just the
right agent for you. Management fees can range from 8%-
15%, depending on an investor’s strategy. For B2L property,
charges typically range from 8%-12% whereas Houses
of Multiple Occupation charges will be higher due to the
greater amount of work involved. Agents are incentivised to
collect rent monthly or they do not get paid – something to
bear in mind as charges are not borne on empty property.
A tenancy agreement is essential and governs the
relationship between tenant and landlord. An Assured
Shorthold Tenancy agreement (AST) is used by landlords
to govern this relationship. An AST lasts for a minimum of
six months but generally speaking a landlord and tenant
will enter into a 12-month agreement. I would highly
recommend entering into a proper, binding agreement
that is comprehensive in nature and takes care of all the
specifics. A contract bought from your local stationary
shop will not cover you sufficiently – and we are all familiar
with the saying, “If you pay peanuts, you get monkeys.”
How to vet and choose the right
My mentor taught me that prevention is better than
cure. This means taking each prospective tenant through an
application process to ensure you get only the best for your
Sean Thomson started
his property investment
career in June 2004 after
working in the financial
field for four years. He
helps investors stop their
wealth being eroded in
South Africa, by mentoring
them to buy UK property.
OCTOBER/NOVEMBER 2020 SA Real Estate Investor Magazine
What exactly would your letting agent need to do to vet
and select the right tenant?
• Acquiring a reference from a previous landlord is a must.
A top tip is to get references from a few landlords, to be
sure that the tenants are solid. Their previous landlord
may be so desperate to get rid of them that they give
them a glowing reference and pass their problem onto
• Understanding affordability means checking the
prospective tenant’s bank statements to see if they can
afford the rent. It also helps to know if they manage their
monthly salary responsibly or not.
• Acquiring a character reference by someone of good
standing withing the community is something I like
to see in an application. A prospective tenant who sets
out to secure this when the agent requests it shows
commitment and will likely be a good bet for your
• It goes without saying that an employment reference is
a good thing to have. We do rent property to tenants on
housing benefit, however, so if this is the case, the agent
should insist on a guarantor who is employed full time to
stand surety on behalf of the prospective tenant.
• Perform a credit check to ensure that the prospective
tenant is in good standing. Anything untoward should
come to light when the credit check is performed.
Evictions: the law protects the land-
Landlords are very well protected by the law in the UK.
If tenants fail to pay their rent, there is a clear legal process
to be followed. A good agent will understand when and
how to issue the relevant notices and engage a solicitor if
The following notices are in relation to the AST discussed
• A Section 21 can be issued without a reason, giving the
tenants a minimum of two months to vacate the property.
If the tenant does not leave on or before the expiry of
the notice, the landlord may have to resort to court
proceedings to have them removed. Many landlords
employ this strategy if they want to sell the property or
are having other issues with their tenants.
• A section 8 can be issued for rental arrears eviction only.
This notice can be served when the tenant is at least
two months in arrears, giving them two weeks’ notice
to vacate. Again, if they do not leave, the landlord will
need to start court proceedings to have them removed
and regain possession of the property. There are other
ways to evict tenants, but it can be tricky and the decision
ultimately rests with a judge.
• Landlord registration and/or accreditation is required in
some parts of the UK. WealthTrek-trained investors are
constantly updated on any changes and understand the
implications thereof. They are also introduced to vetted
agents as they go through our programme.
Having a competent management or letting agent to
manage your UK investment properties at a distance it vital
to ensure your success. Do your homework, acquire the
right agent, and reap the rewards of having a well-managed
UK property portfolio.
Next month we will give you some basic cashflow tips
to get you started with B2L, Social Housing and Houses of
Multiple Occupation in the UK. We will also explore flipping
property for cash and how this can act as a vehicle for you to
recapitalise your UK property business.
SA Real Estate Investor Magazine OCTOBER/NOVEMBER 2020