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When you’re emigrating one of the first things to consider is if you’ll keep your sell your home. It’s a hard choice to make as, for some, there’s always the consideration of moving back if things don’t work out.
If you want to keep your home, you’d need to rent it out – particularly if you need an income to pay for any outstanding loans on the property. If you’re lucky enough to own your home outright, you may still want to rent it as it could offer an extra income or a nest egg for retirement. It could even end up as a pot dedicated for any maintenance or repairs.
So, what’s best – renting or selling? Here we go through the pros and cons of both to help you make up your mind on what’s best for you and your family.
The reason for renting
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It’s not always possible to get the asking price for your home and if you’re in a buyer’s market (where the market is in favour of buyers as there’s so much choice) then you’re unlikely to get what you want and may pressure you to take much less than the asking price.
However, renting can give you that hiatus until the market turns in favour of sellers. This is a risk though as it can take some months or even years for the tables to turn.
You may also want to hang on to your property if your emigration doesn’t go according to plan. Anything can go wrong – visas could expire, job markets abroad could turn sour, or you may simply find yourself in a position where you long to return home.
Many South Africans have found themselves in such a situation, hence the success of schemes like the Homecoming Revolution, which has seen many South African families returning from all parts of the world and making South Africa their home again.
Victoria Silberbauer of RE/MAX Premier says: ‘Each case is different. If the family moving overseas have strong roots in SA, then they should keep the property and rent it out.’
Renting does come with its risks too and it’s best to ensure there’s someone available to manage the property, particularly if you move far away. With the increase in the cost of living, there’s always a chance of a default on rent so it’s vital to ensure you have a good tenant.
‘If you do choose to rent the property then it should be managed by a professional or family member with regular inspections.
The inspections are to ensure the property is well cared but also to ensure the tenant is happy and comfortable. A happy tenant is more likely to be a good tenant,’ advises Silberbauer.
Reasons for selling
Selling gives you the advantage of closure and, of course, frees up capital that you can use in your house move. There’s no added pressure to find the right tenant and the right family member or company to manage the property.
It may also not make economic sense to rent out your property. ‘If the bond is higher than the rental return, then I recommend selling. If they do not plan on returning even for a holiday, then selling is better than renting it out. There is always a worry that a tenant might not pay, or they might damage the property,’ adds Silberbauer.
While funds can be used for the move, bear in mind that large sums will have to be transferred over in stages if you have over R1 million in the bank from any sale.
Under the Single Discretionary Allowance (SDA) South Africans are only allowed to transfer R1 million. Figures over this amount up to R10 million will need special clearance from the South African Revenue Service (SARS).
Sell or rent?
There are many pros and cons to renting and selling a property. It all really depends on what your intentions are when you’re emigrating. If you’re not getting the right offers for your home, pausing a sale and renting it out may just be the right course of action.
But have a good think about whether you’re able to manage the property from abroad and if you have a reputable agent on board that could do the management for you if you’re not good with admin or too far away and in a different time zone.
If you’re undecided, speak to rental and selling specialists, outline the costs of each scenario and see if it’s affordable.
