The latest rental index published by PayProp held good news for landlords: national rental growth rates appear to be stabilising and all major provinces have seen improvements in tenant payment behaviour. While this implies the worst is over for now, pressure remains high on both landlords and tenants.
On the tenants’ side, affordability is critical. A huge number are still feeling the effects of the pandemic on their income and job stability. This is particularly prevalent in the low end of the market – properties with monthly rentals of R3000 or lower.
The above-CPI increases in utilities and municipal charges are only going to make it more difficult for struggling tenants to meet their monthly rental obligations going forward. To minimise the fallout, she urges tenants in financial difficulty to open communication channels with their landlords early, before their payment situation becomes dire.
It’s important to remember that landlords often rely on rental income to meet their own financial responsibilities. If rental stops coming in without warning, they could find themselves in real trouble. This doesn’t put them in a particularly understanding frame of mind when addressing the issue with their tenants, and generally results in poorer outcomes for everyone involved.
With advanced warning, however, landlords can often take steps to protect their own financial stability, enabling them to better help tenants ride out tough times.
This kind of proactive approach is going to be key for rental property performance, all-round. Landlords able to identify and address issues early on will experience far better tenant retention and fewer vacancies as a result.
Vacancies remain a problem thanks to affordable property purchases eroding one end of the tenant pool and financial constraints eroding the other. The Western Cape is currently experiencing the highest vacancy rates at 14.38%. The Eastern Cape has the lowest vacancies at 4.28%.
We’re still very much in an oversupply situation, with more rental properties available than qualified tenants to fill them. That means landlords need to offer value for money to secure the top-quality tenants who have their pick of a huge range of options.