Many South African homeowners who choose to emigrate have to decide whether to keep their properties here or rent them out when they embark on their new journeys.
After all, it could be a safe haven to return to should things not work out on the other side, or even an option for retirement.
Depending on the visa routes they take, the countries they move to, and the amount of start-up capital they need once in the new country, some people have no choice but to sell their homes to finance the relocation; others, however, are in positions where they can hold on to their properties.
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FNB’s residential Property Barometer for Q2 shows that 9 percent of property sales were due to emigration. This figure is higher in the more expensive property price brackets, with 19 percent of sales in the R2.6m to R3.6m category and 16.1 percent in the above-R3m bracket respectively for reasons of emigration.
Although keeping your home gives you a backup plan and allows you to use the property as a holiday or retirement home, the choice is still a difficult one. And there is no one-size-fits-all answer, says Andrew Golding of the Pam Golding Properties. It all depends on a number of influencing factors, personal circumstances, and choice.
While some South Africans choose to keep their properties when they emigrate and let them while they are living abroad, those who are genuinely emigrating usually do not want to hang on to their homes here. Occasionally, if homeowners leave the country to work abroad on contracts for a few years, though, they keep them until until they return.
As an alternative to emigration, Golding says a number of South Africans choose to acquire property without leaving or severing ties with it. Many look to acquire EU citizenship through property purchases in order to provide themselves and their children with opportunities to travel or work in Schengen Europe or spend part of the year overseas.
“Others are looking for sound offshore investment opportunities as a currency hedge.”
Why you should sell your home when emigrating
In many cases, it is advisable to sell your home when emigrating, says Rawson Property Group’s Craig Mott. This is because emigration is already a stressful process, and liquidating assets can go a long way to sustaining you through your first year or two in a new country.
“It can also be financially and emotionally distressing if you need to spend money maintaining the property. If you do not have a trusted agent on your side then you will need to manage tenants on your own from afar, and that can be difficult when regular inspections need to be done or when dealing with a defaulting tenant.”
Most homeowners who are emigrating choose to sell their properties as, generally speaking, they emigrate financially, to avoid having to pay tax in two countries.
“They rather liquidate completely. We seldom have people who prefer to keep their properties in South Africa.”
In cases where they do choose to let their homes, Mott says they eventually settle in another country and, after experiencing the lifestyle and job scene for a few years, feel comfortable with selling their properties here.
Chas Everitt’s Berry Everitt also beleives that the best choice is to sell.
“It’s difficult enough to emigrate and adapt to a new life without having to worry about what your tenants may be doing, and what problems there may be in terms of erratic municipal services, even if you have an excellent rental property manager.
“If you really want a rental property, rather buy one close to where your new home is.”
In addition, emigration is also a “very difficult, stressful and often costly” process that usually involves a search for a new job or new business opportunities; getting work and business permits; deciding on a real estate investment or finding a rental home; obtaining temporary or permanent residence; moving a whole family to a new home and new schools; moving pets; shipping belongings and trying to fit into a different culture.
“This is further complicated by having to comply with the unfamiliar laws of another country, trying to understand or assess documents and contracts, and considering what to do about your investments, insurance policies, bank accounts, and taxes in South Africa.”
What you should know when keeping your home
If you do, however, want to keep your property and let it, Everitt says you should never try to manage it from a distance without the help of a qualified and experienced rental manager who you trust.
Furthermore, Mott says you need to prepare in advance and take care of property repairs and maintenance issues before the property is let, and ensure that you keep in line with rental pricing trends.
“Get your rental property valued by a rental agent, and market it in accordance with that.”
If you choose to rent out your home fully furnished, you need to prepare an inventory of all the furniture and equipment and have the tenant sign an acknowledgement of the inventory at the incoming inspection.
Like any other investment, the key lies in intelligent asset management, Everitt notes.
“Having a rental expert on board can help minimise risks and maximise returns in the long term, allowing a stress-free rental experience.”
What you should do if your emigration is urgent
Whether it is better to sell or let your property will also depend on the urgency of your move. If you need to sell your home quickly because of relocation deadlines, Mott says the key factor is pricing. You should start by having your home valued and then ensure it is priced correctly to sell. You should also sign a sole mandate with an agent.
“With a sole mandate, your agent can afford to give your property their full attention because they’re guaranteed the commission from the sale. That means they’re not going to shy away from spending more time and money on marketing or putting more effort into negotiations.”
Everitt agrees: “Award a sole mandate to a successful real estate professional who understands the urgency of your situation, will price your home to be competitive in the current market, and be willing to negotiate with prospective buyers.”
You should be upfront with your agent about your needs so he or she knows whether it is an urgent sale, and be flexible with your pricing so that it is in line with the market.