Rental Market Review (The Bugle)

If you have been in the market to rent a property within the past six months, you would have quickly realized that there is a huge shortage of quality rental accommodation available along the Dolphin Coast. The shortage of new supply coming onto the market has limited the choice for would be tenants and the reluctance of many property owners to make their properties available for rental further steepens the supply curve.  One of the leading tenant credit bureaus in the country, Tenant Profile Network (TPN), which focuses on the residential rental market has recently published its Rental Payment Monitor and provides some interesting insights. This report confirms that the stock shortage is not limited to our region and is a national issue, which tenants have to deal with. This is not surprising however when we consider the national average buy-to-let statistic is only 8% of all sales. Developers were hard hit over the past five years and very few new projects were provided for. There are current indicators, such as the Stats SA figures for buildings plans passed, increasing substantially in the first quarter of 2013, which will eventually translate into more supply. 

Locally we have two new large scale projects, Manor Estates and Sheffield Manor, which have been supplying new rental stock to the market within the ultra-active R7,000 to R10,000 p.m. bracket. We know that more people are renting than ever before and we also know that people are staying in the rental market for longer – the average age of a tenant has increased from 27 to age 31. The result of this limited supply has been good news for landlords. According to TPN the number of tenants in good standing has increased steadily to 84% as at Q1, 2013. The payment performance by rental value and by province is very interesting. The best performing category in terms of rent collection is the R3,000 – R7,000 p.m. group with 86% of tenants in good standing - 73% paid on time and in full, 3% paid within the grace period, 10% paid late, 8% made a partial payment and only 6% did not pay.  The R7,000 to R12,000 p.m. category is very similar, but things start to drop off on the lower and upper ends of the spectrum. The lower end (rentals below R3,000 p.m.) showed 77% of tenants in good standing with 64% recorded as having paid on time, 4% paid within the grace period, 9% paid late, 9% made a partial payment and 14% did not pay. On the upper end, recorded for rentals above R25,000 p.m., only 67% of tenants were in good standing with 51% having paid on time, 5% paying within the grace period, 11% paying late, 24% making a partial payment and 9% not paying at all. When we consider the behavior of tenants by province, we see that tenants in the Eastern Cape, Western Cape and Mpumalanga performed best – all achieving an 88% in good standing. Gauteng recorded 82% in good standing and KZN and Limpopo each recorded 81% of tenants in good standing. The lowest recorded “did not pay” tenants were recorded in the Western Cape and Mpumalanga at 5% and the highest was in KZN at 12%. This is all the more reason for KZN based landlord’s to ensure they are using professional and experienced rental agents who subscribe to credit bureau service providers such as Tenant Profile Network.

(Author: Andreas Wassenaar, published in The Bugle 19 June 2013)