Though backrooms aren’t a new phenomenon in SA, usage has changed from mainly being a family member to paying tenants, enabling owners to supplement their income as demand outstrips supply in some locations.
With growing urbanisation and people moving to cities to find employment, backrooms remain, for many, the most accessible and affordable accommodation. Such space in areas like Soweto and Cosmo City that are near economic hubs and public transport are highly sought after.
“Generally old townships and especially where there is economic activity there are backrooms, and with growing demand for affordable accommodation, property owners are seeing potential to earn income from rooms traditionally meant for family use,” Teko Motlhabi, founder and CEO of Roomsta Backyard Rentals told Business Day.
Established in 2018, Roomsta is a digital platform aimed at connecting landlords and tenants looking to rent rooms in SA. Motlhabi, who grew up in a township, saw a gap in the small-scale rentals market in SA to create a digital marketplace and cut costs for tenants who often have to travel for 5km to find a suitable room.
Rental prices
Motlhabi said in Gauteng, demand for rooms is high in Protea Soweto, Thembisa, Cosmo City, Diepsloot, Mamelodi and Sebokeng. Demand in Johannesburg is also good, he added.
Tenants include young professionals, young families and people looking for affordable accommodation. These rooms are as big as bachelor apartments, with mostly shared bathrooms and kitchens. Many recent designs do, however, have their own bathroom facilities.
As with any property, rentals depend on location, the quality of the room, security and amenities in and around the area. Motlhabi said Roomsta is collecting as much data as possible about the backroom rental sector so that pricing is regulated or there is an acceptable level of average rentals charged.
Rentals start from R900 a month and can reach as much as R5,000, including electricity and water in some instances. A quick look on the Roomsta website shows rooms available for R1,500 in Braamfischer, R2,200 in Nellmapius and R2,500 in Potchefstroom. Tenants pay one month’s rental as deposit, which they are refunded at the end of their lease agreement should they choose not to renew.
Unlike other platforms that charge a rate upon a successful transaction, tenants and landlords do not pay to use the Roomsta. Landlords can register to list their rooms; tenants, once registered, have access to listings and landlord contact details.
Motlhabi said Roomsta’s role is to facilitate the connection between the two parties and does not involve the whole transaction. “Landlords have been asking us to offer transaction services, and to this end we are working on developing the payment system on our platform,” said Motlhabi.
He said they are also looking at tools such as Matterport that enables 3D virtual tours of rooms and locations, making is easier for tenants to shortlist properties for viewing, thereby saving money and time.
Roomsta makes money through partnering with stakeholders with similar interests in the sector. These include financial services provider TymeBank; uMaStandi, a property financing company; and the Rental Housing Tribunal. Both uMaStandi and the tribunal refer people who can make use of the Roomsta platform. In addition, the tribunal has been instrumental in providing education on rental rights to tenants and landlords.
“We expect the sector to continue growing ... along with quality rooms to suit the needs of modern tenants,” Motlhabi said.
Technology
Motlhabi has been in the built environment for much of his career from engineering, owning companies in the construction sector and property management. His interest in proptech or property technology — the tools that real estate experts use to optimise how people buy, sell, research, market and manage property — was the inspiration for Roomsta.
A 2017 property conference on smart cities in Africa planted the seed of creating a digital platform marketplace. A proptech conference in France in 2018 gave birth to Roomsta, which is used by thousands of tenants and landlords in all SA’s nine provinces.
Motlhabi said studies conducted by various stakeholders in township economies estimate the backroom sector to be valued at more than R20bn annually. However, when Roomsta was established, it didn’t experience much take-up until the Covid-19 pandemic in 2020 forced real estate companies to adopt technology to transact.
Motlhabi said there is still very little official data on the backroom market, while municipalities are a hindrance to growth because it can take up to a year to approve plans to develop backrooms, limiting supply.
“We would like to grow the platform and also be the main source of data for this sector to attract investors,” he added.
Other businesses in the sector include Indlu Living, a Gauteng-based company. With websites like Property24 and Private Property catering for the mainstream sector, many tenants and landlords use platforms such as Gumtree and OLX, though they don’t quite address the needs of users in townships.
Motlhabi said Roomsta used social media platforms like Facebook to spread the word and found that in most cases, people travelled up to 5km to look for rooms. Roomsta also found there is a dedicated Facebook page in each province for people looking for rooms to rent. “Technology enables the connection of tenants and landlords wherever they are, thus saving time and money.”
Users are tech savvy and even the older generation has embraced the platform as it is easy to use, Motlhabi said. Once the payment system has been added to the platform, tenants and landlords can transact at home.
“Technology is the future, and for this segment of the property market the opportunities are endless,” he added.
Roomsta also wants to use the platform to educate people, especially the youth about the property market with a view to tapping into work opportunities within the sector. Roomsta has aspirations to expand to Botswana, Lesotho, Namibia and Swaziland where rooms also are in high demand.
“As the business grows, our vision is to eventually sell property-related products such as furniture, for example,” said Motlhabi.
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