GEORGE NEWS - Not more than 25% of a person's income should be spent on accommodation, and in the case of a couple with a double income, not more than 30%, according to Dr Dennis Farrell, chairperson of Business Café.
He said the average salary in George among the higher end of earners (government and corporate company employees excluded) is between R15 000 and R17 500.
Therefore someone with an income of R16 000 should not spend more than R4 000 on accommodation.
Electricity and water, car instalments and medical aid also make demands on people's income.
"High municipal costs have an upward pressure on rent as the landlord recovers such costs from the tenant. For the average person it becomes unaffordable. I think landlords are exploiting the high demand for rental property."
Maia Burger, an estate agent from Just Property, says to determine whether a client will be able to afford a certain rental, they multiply it by 3,3.
So to qualify for a rental of R6 000, the tenant must earn R19 800 (that equals about 30% of the person's income.) Burger said their rental clients earn on average between R15 000 and R20 000.
Lauren Waring, Director of Human Settlements, Planning and Development, and Property Management, said almost 80% of households in George earns below R22 000 and of this, 42% earn less than R3 500 per month. The latter category qualifies for state housing.*
However, there is a real shortage of opportunities for people earning between R3 500 and R22 000.
"The average monthly household income in George is R20 650, and a household with this income could qualify for a mortgage of R836 500. Affordable housing is urgently needed at scale.
"In order to encourage the private sector to start meeting the needs of the gap market, Council has approved a set of incentives for developers in this market."
* While these lowest income earners are on the waiting list for state housing, they have to pay rental.
Farrell said according to information he received, a bungalow (usually a single room) in areas such as Conville, Borcherds and Parkdene costs a minimum of R2 000, excluding water and electricity.
In Thembalethu, a shack can be rented for R500 per month (add R200 for electricity) and an RDP house costs R1 000 per month (which would be an illegal transaction).
People living in these areas often earn only the minimum wage of R25 per hour. Their 45-hour week equals an income of R1 125 or monthly wage of R4 747,50 (R1 125 x 4,22), said Farrell.
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