‘Mafikeng’s Increasing back rooms- Part 2’. While it makes sense to take advantage of accommodation shortage in Mafikeng by putting backrooms or a cottage for rental; property owners need to exercise due diligence. As I had indicated in previous week, they are property owners who are converting houses into several individual bedrooms by removing common space such as lounge and sitting.
This poses another challenge with insurance. Property owners need to examine their house insurance documents. Certain renovations may not be permitted by the insurance as well as the bondholder. If in future you need to make a claim against what is recorded as a 3 bedroom house, and then upon assessment – the property has 6 bedrooms with several outside doors; Insurance may not honour that claim. Property owners would find themselves stranded if anything should happen to the property. For example, the insurance would deny the claim on the basis of a missing wall or kitchen.
While property owners know that you cannot build from wall to wall on boundary lines, many choose to ignore this fact. All backroom structures should be approved by municipality. You may gain some benefits of rental income from unapproved backrooms for a while, but this would definitely be a sticky point in a sale agreement. Should a buyer ask for the house plans and one is unable to produce them; the buyer would definitely insist on a purchase price negotiation. The property owner is no longer in a positon to claim that they are selling an income property, as the buyer will be taking on the risk of backrooms that may not be approved by municipality. If one is buying a property with backrooms for investment, request the seller to produce the approved plans as part of the sale agreement.
There is definitely an exponential growth of backrooms in Mafikeng properties. Property owners need to be weary of what kind of backrooms they are putting up versus what other property owners are offering for rental. The present market conditions may leave tenants accepting whatever is on offer but this will change in the near future. This is one space I predict will have fierce competition. Backrooms should be built to last and not just so that someone can move in and start paying rent as soon as possible. It would be unfortunate when an investor or home owner comes to the realization that they have backrooms or cottage that no tenants wants to rent because it does not meet certain standards.
Speak to your agent they should be in a position to advise what will work for your location and target market.