Retired SA Woman Earns R45,000 Monthly From 15 Township Backrooms Without Paying SARS
- An informal economy expert revealed how a retired South African woman turned her pension payout into a thriving township rental business
- The woman built 15 backrooms on her property, charging R3,000 per unit each month with no formal employer or tax registration
- Her story reflects a national backroom rental market that generates an estimated R30 billion annually across South African townships
- Briefly News spoke to financial expert Natasha Naidoo about rental income, allowable expenses and what township landlords need to know about SARS compliance
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Source: Getty Images
A retired South African woman is pulling in R45,000 every month from her township property, and not a single cent comes from a formal employer or pension fund.
Informal economy expert GG Alcock shared her story during a Standard Bank Talks interview, using it to highlight just how powerful South Africa's backroom rental sector has become. Known locally in Zulu as amarum, this market has quietly grown into one of the country's most significant self-built housing industries.
How one pension became a property empire
The woman's story is straightforward but striking. After retiring, she took her full pension payout and put it directly into construction. She built 15 rental rooms on her township plot and began renting each one out for R3,000 a month. Combined, those units now bring in R45,000 monthly, completely tax-free and entirely on her own terms.
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For her, the backrooms replaced the pension. They provide income, security and independence in retirement, without relying on any institution or employer to sustain her.
A R30 billion sector flying under the radar
Her situation is far from unique. Alcock highlighted that the backroom rental market generates an estimated R30 billion annually across South Africa's townships, suburbs and rural areas. Despite this scale, most of it goes uncounted by formal financial institutions and the South African Revenue Service.
One reason the sector operates largely in cash is that township entrepreneurs often cannot access formal bank credit. Old Mutual data shows that 64% of South Africans keep a portion of their savings in cash, and it is these savings that typically fund backroom construction.
Alcock argues that government authorities and corporate executives consistently underestimate the size and sophistication of township business activity. These are not side projects. Backroom rentals provide high-density, affordable housing for thousands of South Africans while building genuine generational wealth for the families who own the properties.
Even though most backroom landlords fall outside the formal tax net, the money they earn cycles back into the broader economy through retail spending, VAT, local employment and family support networks.
Speaking to Briefly News writer Nerissa Naidoo, financial expert Natasha Naidoo discussed how rental income is treated by the South African Revenue Service (SARS) and what landlords need to know about their tax obligations.
Naidoo explained that rental income generally needs to be declared, even when the landlord operates informally, receives cash payments or does not have a registered company.
“If you earn an income and don't declare it, it's considered tax avoidance,” Naidoo said.
However, she clarified that landlords are not necessarily taxed on every rand they receive from tenants. Certain expenses directly linked to producing and maintaining the rental income may be deducted when calculating taxable rental profit. These can include qualifying repairs and maintenance, utilities, insurance, advertising, stationery and certain travel expenses connected to managing the property.
This means the calculation is generally based on the rental income received less allowable expenses, rather than simply taxing the landlord on their total rent.
For the 2026/27 tax year, the income tax threshold is R99,000 for people under 65, R153,250 for those aged 65 to 74 and R171,300 for those aged 75 and older. These thresholds apply to taxable income, rather than gross rental income.
Naidoo also stressed that landlords do not need to create a company simply because they earn rental income.
“There is no need to open a company or business account or register as a company to be taxed. You can declare the income in your personal capacity,” she explained.
For someone in the woman's position, this means the rental income would generally need to be declared in her personal tax affairs, with her allowable expenses and age taken into account when determining her taxable income.
Naidoo added that SARS has online platforms to help taxpayers register and submit their information, although access to these services can be more difficult in some rural areas.
She also cautioned against assuming that the informal nature of a rental business makes it exempt from tax.
“Even cash receipts must be declared to SARS,” Naidoo said.
The woman's reported R45,000 monthly rental income would amount to R540,000 in gross rental income over a year. That figure alone does not establish how much tax she would owe, as her allowable expenses, age and overall taxable income would need to be considered.
It is also important not to assume that the R540,000 automatically qualifies for the Turnover Tax regime simply because it falls below the R600,000 threshold. Rental income from immovable property can be subject to specific rules, and landlords should establish which tax treatment applies to their individual circumstances.
Failing to declare income that should be declared can put a taxpayer in breach of their tax obligations and may carry serious consequences. Landlords should therefore keep records of rent received and retain supporting documents for expenses connected to the property.
Source: Getty Images
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Source: Briefly News
