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Low stock drives higher rents

The latest Rental Payment Monitor from the Tenant Profile Network (TPN) for the first quarter of 2013, reports that there is a definite shortage in good quality rental stock. This was confirmed by a resounding 94% of respondents to a national survey of South African residential rental agents, the Rental Payment Monitor says. 

The current lack of housing stock is leading to an increase of buy to let investors in the market. “Because demand is currently exceeding supply, landlords are able to achieve good yields,” says Francois Venter, Director of Jawitz Properties.  In addition, more tenants are paying their rent on time than last year, making the environment doubly attractive.

However, the Monitor also highlights a Statistics SA survey which shows an increase in residential building plans passed, with January /February 2013 increasing by 20.5% year on year, while flats and townhouses have increased by 83.9% for the same period.

According to the Monitor, with the shortage of rental stock, rental agents are able to pick and choose the best tenants to fill those properties that are available. Meanwhile, existing tenants in good standing with landlords are at a record high. “The Monitor indicates that 84% of tenants pay their rent on time and are in good standing with their landlords. This is up by almost 20% since the first quarter of last year,” says Venter. TPN finds this surprising considering that the first quarter of the year is usually synonymous with tenants unable to pay their rent, post the holiday season.

The Monitor further states that this year 38% of tenants are first-timers, while 35% have moved to down-scale and 27% have moved to upscale. Tenants paying between R3000 and R7000 per month account for 66% of rentals in South Africa, while 11% are paying more than R7000 per month and the same percentage are paying less than R3000 per month.

Late paying tenants have decreased substantially from last year’s first quarter at 32% to this year’s much smaller 10%. Tenants making partial payments remain at 8%, while tenants who don’t pay at all have decreased. “Last year’s Report saw 11% of tenants not paying at all, but this year has seen just 8%. It’s fantastic to see this percentage come down,” adds Venter.

The Western Cape has topped the list as the province with 78% of tenants in good standing with landlords, followed closely by Mpumalanga and the Eastern Cape at 76%, with Kwazulu-Natal in fourth place at 69%. Meanwhile tenants in good standing in Limpopo and Gauteng both total at 68% respectively.

“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 concludes.


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