Property maintenance impacted by higher interest rates
Category Advice
The announcement by the Monetary Policy Committee to increase the repo rate to 8,25%, up by 50 basis points and leading to the prime lending rate to 11, 75%, its highest level since 2009, is set to threaten property values as maintenance takes a back seat.
According to leading property maintenance and asbestos contractor, Indawo's managing director, Geoffrey Jäck, property maintenance is a critical part of property ownership. Lack of maintenance is a major cause of reduced investment value of buildings. High interest rates are set to exacerbate the decline. Property owners now have a delicate balancing act between meeting bond repayments and attending to important maintenance projects.
On top of this, high winter rainfall adds to the pressure as buildings suffer with leaks and other structural problems resulting from the downpours.
The increased interest rate has a significant impact on the market, says Jäck.
- The financial strain on budgets leaves limited resources for maintenance. Bond repayments take preference with reduced funds available for essential repairs. As a result property maintenance will be compromised leading to potential long-term and significant financial consequences for owners and property investors.
- Property maintenance will be deferred. Delaying essential maintenance may result in less threatening structural problems developing into major structural damage and a more costly repair in the future.
- Property values are under threat as lack of regular maintenance will impact investment values. Visible signs of deferred maintenance will impact market value.
- Crucially, the law states that damaged asbestos structures and roofs on buildings have to be removed. The interest rate hike will place building owners in a precarious position as they decide to obey the law, or defer asbestos replacement projects.
Jäck urges property owners to consider their maintenance plans in light of the impact the interest rate increase. Considering the rising cost of future repairs against the impact of the interest rate hike, the need to undertake essential maintenance and the crucial need to replace asbestos on all buildings, property owners need to make critical decisions.
High interest rates pose significant challenges for property owners striving to effectively maintain their properties. Prioritise essential maintenance projects, including the removal of asbestos from buildings, to avoid the significant increased cost of repair resulting from further deterioration.
Jäck says that understanding the impact of increased interest rates and the financial strain on property maintenance can allow property owners to strike a balance between meeting the financial obligations resulting form in increased interest rate and maintenance to safeguard the investment value of their properties.
In the meantime here are 4 Eco-friendly upgrades that will increase the value of your home
In an article published on 30 April 2022, Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, suggests that making your property more sustainable can go a long way towards attracting buyers who value these conveniences and amenities.
"Whether buying new or improving your current environment, you can make your house more sustainable with some quick changes and some thoughtful investments to save on energy, water, and maintenance costs," says Goslett.
But, with so many sustainable options to choose from, it can be difficult to know what exactly you should be upgrading on your property. To help make this decision easier, RE/MAX suggest that homeowners consider four essential pillars for home sustainability; namely electricity, water, waste, and self-sustainability.
1. Invest in solar power
Homeowners should arrange for a consultation on whether the property can easily adapt to solar power panels. This will depend on your type of roof and its exposure to the sun. In the long run, running your property on solar power will save thousands off your electricity bill and will reduce the impact of relying on non-renewable energy sources.
2. Upgrade your water-efficiency
Those with solar power will be able to heat your water sustainably without reliance on the grid. However, there are many other ways to optimise the way that your property uses this resource.
For example, you could install a rainwater tank to reduce pressure on your local water supply systems and invest in waterwise shower heads in your bathrooms. It can also be as simple as adding a bucket to your shower to capture excess water for your garden, but if you invest in a proper greywater system to maintain your garden during times of drought, this could double as a way to invest in the resale value of the property.
3. Find out about local recycling
Look into your municipality's recycling guidelines and speak to your local estate agent to find out about where you're able to drop off recycling in your area. If you feel your neighbourhood is underserved, consider spearheading communications to introduce that recycling be collected from the households in your community for even more convenience.
4. Use your garden to be more self-sustainable
Those with the yard space should invest in creating a composting system to reduce the amount of waste the household creates. Investing in plants is also wonderful for naturally purifying the air, helping to dampen street noise, and can also provide shade to cool the home in summer, which in turn will lessen your property's reliance on non-natural and expensive cooling systems.
Planting your own fruit, vegetables, and herbs will also reduce your reliance on the local grocery which will reduce the amount of packaging waste your household produces.
"In South Africa, these green features are becoming increasingly popular among buyers, especially as a result of the ongoing load shedding and the prevalence of droughts in our country. Don't hesitate to speak to real estate professionals for advice on the best sustainable home improvements in your neighbourhood and for your specific type of property," says Goslett.
https://www.property24.com/articles/property-maintenance-impacted-by-higher-interest-rates/31707
Author: Property24