Tenant Behavior (The Bugle)

As a new landlord there are two risks that I would typically have to consider. The first is the rental payment risk - not getting paid, on time or at all. The second risk is that of a tenant damaging the property. I have recently upgraded the two-bedroom apartment I have purchased and it is now in show room condition and ready to be marketed. As an experienced rental agent I am familiar with the pitfalls that unsuspecting landlords can be exposed to. Without this insight, I would be at a disadvantage and would therefore encourage every landlord to use the services of a respected and experienced rental agent. The tools we have at our disposal are exceptional and are used to mitigate the two risks I am exposed to. 

Tenant Profile Network (TPN) is a credit bureau, which every professional rental agent should subscribe to. It provides the most rigorous credit check that can be performed on a prospective tenant by bundling three national credit checks into one – Experian, TransUnion and TPN. The level of detail provided on an applicant is impressive. It shows all previous enquiries, supplier details, all prior addresses, and where the prospective tenant rented a property through a TPN subscriber, detail on all prior rental payments. The date the tenant paid each month is recorded and this information provides an excellent guide as to what can be expected from future payment behavior. The “Credex” Score generated from these credit bureaus reads like a report card, with the final score ranging from poor to excellent, a rental affordability rating provided and even a probability of the prospective tenant squatting in the premises provided. Big brother is watching you like never before. This can work for or against you if you are a tenant. Good payment behavior will reflect for at least five years and your rental application will be considered ahead of others who may not have the same positive profile. However should a tenant’s historical payment behavior be recorded as negative, it will be unlikely that any new landlord will want to consider the lease application. 

TPN publish an interesting quarterly rental monitor that tracks the payment behavior of over 50,000 tenants within South Africa. For the 4^th quarter of 2012 the figures indicate that tenants in good standing ranged from 81% in Gauteng to 89% in the Western Cape and Mpumalanga. In KZN 84% of tenants were in good standing.  Tenants paying on time ranged from 69% in Gauteng and KZN to 80% in the Western Cape.  Tenants recorded as not having paid ranged from 5% in the Western Cape to 10% in Gauteng. KZN reflected 9% of tenants who did not pay. On a national basis and over the calendar year for 2012, 83% of tenants were in good standing, and 72% paid on time. What is really interesting from the TPN report is that when divided across rental value categories, the lower bracket (below R3,000 p.m.) and the upper bracket (above R25,000 p.m.) have the worst performing tenants with 16% not paying in both. The mid rental brackets have “not paying” statistics of between 6% and 10%. The best performing tenants are in the R7,000 to R12,000 p.m. rental bracket, with 76% having paid on time, 7% not paying and 87% being in good standing.

(Author: Andreas Wassenaar, published in The Bugle, 27th Feb 2013)