Buy-to-Let in 2025: Is passive property income still profitable?

Key Takeaways

• Rental income growth remains strong, with national averages above R9,000.
• Five key risks threaten returns — but smart strategies can reduce exposure.
• Professional guidance, planning, and screening tools are essential for success

Introduction: Buy-to-Let still makes sense - If you’re prepared

Earning passive income through property is still one of the most powerful wealth-building strategies in South Africa, but only if done correctly says Paul Stevens, CEO of Just Property.

In 2025, the buy-to-let market remains resilient, with solid rental growth, improving tenant behaviour, and rising investor confidence. However, potential returns come with potential risks, and understanding both sides of the coin is crucial.

Current Rental Landscape: Positive Momentum in 2025

The South African residential rental market entered 2025 with impressive momentum. According to the PayProp Rental Index Q1 2025, average national rent now exceeds R9,000 for the first time — a psychological milestone and a signal of growing strength.

Key market highlights

• Rental growth averaged 4.6% year-on-year, just below Q4 2024’s 5.2% peak, one of the highest in 5 years.
• Inflation cooled to 5.3%, and the prime lending rate dropped to 10.75%, making finance more accessible.
• 88.5% of tenants are now in good standing, improving landlord confidence.

KwaZulu-Natal and the Western Cape continue to outperform, while Gauteng is showing stronger growth than in previous years.

5 Risks that can derail your Buy-to-Let success and how to mitigate them

1. High Upfront Costs

The Risk: Transfer fees, deposits, bond registration and maintenance reserves can put pressure on cash flow before income starts.
The Fix: Work with a real estate expert to fully understand and plan for all upfront costs. Never sign an OTP without knowing your total capital outlay.

2. Changing Legal Landscape

The Risk: New laws or zoning regulations can impact your rental strategy or profitability.
The Fix: Partner with a professional rental agency that stays ahead of legal developments and keeps you compliant with evolving lease and landlord-tenant regulations.

3. Vacancies & Rental Downtime

The Risk: An empty unit still incurs costs, but earns you nothing.
The Fix: Market your property professionally, price competitively, and use an agent with a proven tenant placement track record to minimise vacancy periods.

4. Ongoing Maintenance Costs

The Risk: Unplanned repairs (e.g., leaks, burst pipes) can eat into your profit margins.
The Fix: Budget for maintenance. Set up a reserve fund and schedule annual inspections to prevent larger problems down the line.

5. Problematic Tenants

The Risk: Late payments, damages, or evictions are costly and emotionally draining.
The Fix: Use a vetted rental agency that provides thorough tenant screening, proper lease documentation, and ongoing management.

Next Steps: How to Turn Buy-to-Let into Passive Profit

The numbers still support the case for residential rentals, but passive income doesn’t mean passive planning. To succeed in 2025 and beyond, you’ll need:

• The right property in the right location
• The right partner (agent, manager, legal support)
• A clear strategy and realistic cash flow planning

Ready to Invest Smarter?

Before you make an offer, talk to an investment specialist. They’ll help you assess the numbers, identify prime opportunities, and manage the risks. Whether you're scaling your portfolio or buying your first unit, professional guidance is your edge.

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