Guide to Holiday Home Insurance South Africa – Assetsure are able to offer South African holiday home insurance. Holiday home purchasers and Investors are flocking to South Africa purchasing property for a variety of reasons. In the main, the strength of sterling to the South African Rand, the cost and availability of housing and a safe secure banking system and a security of title that is hard to beat helps make the country a desirable location for a holiday home or rental property. The good news is, there are no restrictions on non residents owning property in South Africa and the process of purchase is fairly straight forward. A non resident will of course be subject to the same laws and regulations as South Africans and legal advise before purchase is necessary to fully understand any rules and regulations that will apply to you. From an insurance perspective, this part of the world has been known to suffer from forest fires and the Cape regions in particular have suffered bouts of flash flooding. Holiday Home Insurance is available for property in South Africa and a full range of perils can usually be obtained. The same rules apply in South Africa as in the United Kingdom, you should insure the building for the full reinstatement cost and if you are not sure how to calculate this figure, you should seek a professional opinion. If you also want to include contents insurance, it us normal procedure to insure the contents on a new for old basis. In order to qualify for this cover, you will have to insure for the full as new replacement costs. For many people, a property is purchased just to use as a second or holiday home but on occasions, the property is let out in order to help pay the mortgage costs. In this circumstances and indeed for property investors letting property If you let a property in South Africa, you’re required by law to pay tax on your rental income actually in South Africa and not in the country where the income is received. Making sure that your policy covers third party liability is essential as is making sure that you are actually allowed to let the property. In some areas, particularly on new development estates with shared facilities, letting is not allowed. Checking the rules and regulations surrounding your ability and could save you a good deal of time and money.
The Holiday Letting Market in South Africa – As in most countries, holiday letting is carried out by means of a simple agreement form that includes a description of the property, the names of the renters and the period covered by the rental agreement. It is good practice to have you letting agreement form checked by a local lawyer to make sure it is up to scratch, he or she should also be able to inform you of any local regulations or permits that are required. Because of it’s geographical location and good climate, South Africa is attracting holiday makers from all over the world. You may have to deal with persons whose first language is not English and thus obtaining a translation of your agreement in to a number of languages may pay dividends. If you don’t want to go to these lengths, several off the self contracts are easily available. Many people investing in South Africa for the first time, view long term letting as the preferred option and although their are a number of rent controlled areas in South Africa, on the whole, you can demand what ever rent you wish and local market forces tend to set the amount you can achieve, a bit of research will normally tell you a realistic amount to charge. Estate and letting agents should be a serious consideration to the overseas investor, they have invaluable local knowledge and should be able to help to locate a suitable tenant.
In 2000 the South African authorities introduced some regulation in to the rental property market and the Rental Housing Act imposed some requirements on landlords. This form of regulation will not seem at all strange to UK landlords and transparency in rental agreement certainly helps to prevent disputes at a later date. Long term renters should be aware that their agreement should include the following;
- Your name and address;
- The tenant’s name and address;
- A full description of the property, including it’s address.
- An inventory of the furniture and any supplied fittings
- A list of any existing defects in the property
- The amount of rent and the dates of any increases
- A list of any other expenses that you expect the tenant to pay;
- The date the rent needs to be paid.
- The rental deposit
- Any notice periods
- The landlord’s and tenant’s obligations
- Any additional conditions such as respect for neighbours, the keeping of pets etc
The law in south Africa also places several obligations on both the landlord and the tenant, this basically are as follows;:
- The landlord must always issue a written receipt
- Any deposit received by the landlord must be kept in an interest bearing account. The tenant may ask to know the interest at any time If the tenant pays a deposit, the landlord must invest it in an interest-bearing bank account and must give the tenant a written statement of the interest earned whenever he asks for one.
- A list or property defects must be drawn up and agreed before the tenant moves in.
- Both parties must inspect the property, prior to the tenant leaving to agree on on damages caused during the tenants occupation.
- If there is no damage, you as landlord have seven days to return the deposit with interest.
- If there’s damage, it can be taken out of the deposit but the balance with the interest must be returned within fourteen days.
- If the tenant owes you money, it can be deducted from the deposit but the seven day rule still applies.
- Disputes are dealt with on a local basis by the rental housing tribunal and government offices or an estate or letting agent will be able to assist.
As you would expect the, the sales process is fairly straight forward and strong emphasis has to be placed on quality legal advice to advise all the idiosyncrasies of the south African system, in some cases you may be entitled to a cooling off period and whilst this will not effect too many purchasers, it is important that all of the terms and conditions and contract obligations are explained to you. The main holiday home areas are: Eastern Cape, Free State, Gauteng Pwv, Kwazulu Natal, Limpopo Northern Province, Mpumalanga Eastern Transvaal, North West, Northern Cape and the Western Cape.