Category Long Term Letting Divisions
'Landlord's market' as demand for rental properties exceeds supply
There is a definite shortage in good quality rental properties, the rental payment monitor from Tenant Profile Network (TPN) reports for the first quarter of this year.
This was confirmed by 94 percent of respondents to a national survey of South African residential rental agents, says TPN.
Francois Venter, director of Jawitz Properties, says: "The lack of housing stock has resulted in more buy- to- let investors. Because demand is exceeding supply, landlords can achieve good yields.
"In addition, more tenants are paying their rent on time than last year, making this asset doubly attractive."
However, the monitor also highlights a Statistics SA survey which shows an increase in residential building plans passed, with the number passed in January and February increasing by 20.5 percent year on year.
Flats and townhouse plans have increased by 83.9 percent in the same period.
"According to the monitor, the shortage of rental stock has enabled rental agents to select the best tenants to fill the available properties. Meanwhile, existing tenants in good standing with landlords are at a record high," says Venter.
"The monitor indicates that 84 percent of tenants pay their rent on time and are in good standing with their landlords.
"This is up by almost 20 percent since the first quarter of last year. TPN finds this surprising considering that the first quarter of the year is usually when more tenants are unable to pay their rent, after the holiday season."
The monitor also shows that this year, 38 percent of tenants are first-timers, whereas 35 percent have moved to downscale and 27 percent have moved to upscale.
Tenants paying between R3 000 and R7 000 a month, account for 66 percent of rentals in South Africa, 11 percent are paying more than R7 000 a month and the same percentage are paying less than R3 000 a month.
Late paying tenants have decreased substantially from last year's first quarter at 32 percent to this year's much smaller 10 percent.
Tenants making partial payments remain at 8 percent, and tenants who don't pay at all have decreased.
"In last year's report, 11 percent of tenants weren't paying at all, but this year this figure has dropped to just 8 percent. It's wonderful to see this percentage come down," says Venter.
The Wester n Cape has topped the list as the province with 78 percent of tenants in good standing with landlords, followed closely by Mpumalanga and the Eastern Cape at 76 percent, with Kwazulu-Natal in fourth place at 69 percent.
Meanwhile, 68 percent of tenants are in good standing in Limpopo and Gauteng.
"Tenants countrywide are realising they do need to pay their rent promptly. With stock shortages, replacement tenants are on their doorsteps, and landlords will certainly favour respectful tenants who pay well," Venter says.
Weekend Argus (Saturday Star)
Posted at 07:55AM Jun 18, 2013 by Editor in Market
Author: Julie Pillay