The shocking state of SA rental market – 23% of high-end properties now stand empty
- The number of vacant rental properties in SA has increased by 50% since the start of the year, as the coronavirus crisis wreaks havoc on household incomes.
- Across the market, 11% of properties are now standing empty.
- And only 60% of tenants of pricier properties are paying rent on time.
- For more articles, go to www.BusinessInsider.co.za.
Landlords across the country are struggling to get tenants for their properties, or to collect rent from existing tenants, as the coronavirus crisis continues to wreak havoc on household incomes.
Data from Tenant Profile Network (TPN), the largest credit bureau that tracks tenant payment behaviour in SA, shows that more than 11% of rental properties are now vacant. This is a 50% increase in empty properties since the start of the year.
High-end properties were worst affected: 23% of homes rented out for more than R25,000 per month are now vacant. And only 60% of tenants in these expensive properties are now paying full rent on time, data from TPN shows.
At the lowest end of the market – below R3,000 a month – more than 17% of rental properties are empty. In this category, 38% of tenants are behind on rent.
Across the total rental market, TPN’s data shows that around 73% of tenants paid full rent on time in July. In May – at the height of the strict lockdown – this fell to below 72%.
Only around half of business property tenants are now paying rent on time, which means they are in "good standing" with their landlords.
So far in August, only 66% of residential tenants have paid up, but with almost a week of collections still left to go, this is expected to increase to around 73%, says Michelle Dickens, managing director of TPN.
“This could possibly suggest that May 2020 was the lowest point of rent collection, but as per the August data, recovery is still not in sight,” Dickens told Business Insider SA.
Residential eviction orders during Level 3 of lockdown were being granted with a five-to-ninety-day stay on execution once Level 3 ended, Dickens says.
“That means some landlords who obtained eviction orders in Alert Level 3 now have to wait till 17 November to execute. All the while tenants live rent free.”
Execution of eviction orders during Level 2 was stayed until South Africa moves out of the state of national disaster – which is a moving goal post, she added.
“Most importantly, until there are job recoveries, the residential rental market will remain under pressure. Less tenants with no income will mean higher vacancies and lower escalation, if not negative escalation.”
FNB also expects that residential rental prices could start to head lower than a year ago, as struggling tenants move back with their parents, or households merge to save on rent. Already in June, rental prices were only 1.8% higher than in the same month of 2020.
(Compiled by Helena Wasserman)
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