A third of SA tenants haven’t paid their full rent this month – and May could look much worse
- Almost 16% of SA's residential tenants did not pay any rent in April, and a further 16% did not pay the full amount, according to preliminary data from Tenant Profile Network (TPN).
- The number is expected to look much worse for May, when it will reflect the first mass job losses as a result of the coronavirus crisis and lockdown.
- While evictions are currently banned during lockdown, landlords are already moving to issue letters of demand.
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Almost 32% of South African residential tenants did not pay their rent in full in April, but the real crunch is coming at the end of May – after the first full month of lockdown.
Preliminary data from Tenant Profile Network (TPN), a credit bureau which tracks tenant payment behaviour, shows that 64% of tenants paid full rent on time in April, which was down from more than 65% in the same month last year, and sharply lower than 71% five years ago.
As of April 20, almost 16% of tenants have only paid part of their rent, while another almost 16% made no payment, according to TPN.
“The real challenge facing landlords is the May rent,” says Michelle Dickens, managing director of Tenant Profile Network (TPN). “By this stage in lockdown, many tenants have faced a full month without any pay or a smaller percentage of their normal pay. The stark reality for many tenants with limited or no income for the month of April means they are facing the first of May with no savings for May rent."
More than a million people are expected to lose their jobs due to the impact of Covid-19, according to preliminary modelling by Business For South Africa, a corporate alliance founded four weeks ago in response to the pandemic.
Government has banned any evictions during the lockdown, as well as sheriff services for evictions. But Dickens says TPN has seen a 30% surge in letters of demand against tenants, as landlords continue to demand rent and prepare for cancellation of leases and possible evictions post-lockdown.
One option is for the landlord and tenant to agree that the tenant’s deposit may be used as rent – but the tenant will then have to repay the deposit after the lockdown, Dickens says.
Given that lockdown started just before 1 April, some tenants who were planning to move to a new property, could do so in time. But many tenants – who already gave notice - were forced to remain in their current rented accommodation, she said. “Thankfully these landlords could extend the lease with their tenant on a month-to-month basis with no financial loss.”
But this also meant that some landlords were left with vacant properties during the lockdown, even though they had signed lease agreements starting 1 April. “This has prevented new tenants from taking occupation resulting in financial loss to some landlords."
The coronavirus crisis is expected to have a devastating ability on tenants’ ability to pay, and not only in the residential market.
Since the start of the national lockdown, some of the country’s largest retailers – including The Foschini Group, Truworths, Pepkor and others – have stopped paying rent to landlords, after taking legal advice. Even Dis-Chem, which is trading through the lockdown, is only paying a part of its rent.
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