New tenants may get their first month free - as 20% of Sandton, Soweto rental homes stand empty
- Almost a fifth of residential rental properties in Sandton, Soweto and eThekwini are now standing empty as tenants lose their jobs and move out.
- Demand is at a record low, while the supply of properties is still high, says the Tenant Profile Network, a credit bureau that tracks tenant payment behaviour.
- Landlords will have to offer lower rent, and sweeteners like the first month's rent free, no deposit and new appliances to attract tenants, according to TPN.
- For more articles, go to www.BusinessInsider.co.za.
Finding a tenant is tougher than ever, as the coronavirus crisis continues to obliterate livelihoods.
Data from Tenant Profile Network (TPN), the largest credit bureau that tracks tenant payment behaviour in SA, shows that more than 11.4% of rental properties are now vacant, as job losses wreak havoc on demand.
According to the TPN data, the demand for rental property is now the lowest on record, while supply is at a historic high. This resulted in the number of rental properties standing empty increasing by more than 50% since the start of the year.
“For those tenants with an income, it is a tenants’ market. Landlords should brace themselves for price negotiation and competing tenant incentive take-on benefits like zero deposit, first month rent free, new appliances and free WiFi,” says Michelle Dickens, managing director of Tenant Profile Network (TPN).
FNB is expecting that residential rental prices could soon 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.
“Until there are job recoveries, the residential rental market will remain under pressure and high vacancies will be the new norm,” says Dickens.
Almost a quarter of all high-end properties – rentals of above R25,000 per month – are now standing empty, while the vacancy rate is around 10.3% for properties with rent of R4,500 to R12,000 a month.
The most affected areas are Gauteng and the Western Cape.
In Gauteng, TPN is reporting “staggering” vacancies in Randburg (18.3%), Sandton (19.2%) and Soweto (19.4%).
There is an excessive supply of properties in the Western Cape – probably driven by the number of Airbnb properties looking for long-term tenants due to the impact of lengthy prohibition on short-term lets, says TPN. Airbnb rentals were only recently unbanned under lockdown regulations.
There is a “carnage” of vacancies in eThekwini at 19.4% of all properties, but TPN says there is still positive demand, particularly on the North Coast.
Eastern Cape has had very little construction in the recent past, with the result that there is still excess demand. The province has “very acceptable” vacancy rates in Buffalo City of 7.4% and Port Elizabeth, of 9.9%.
Dickens says landlords are under immense pressure with no end in sight – but a vacancy could be better than being stuck with a non-paying tenant.
Residential eviction orders in Alert Level 3 were being granted with a five to ninety day stay on execution once Alert Level 3 ended. “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. Now more than ever, a vacant property is preferable to a squatting tenant.”
“It is understandable then that a vacant property is a tough situation but not a disastrous one, given that even bigger challenges are felt by landlords with tenants whom they cannot evict immediately even though an eviction order has been granted.”
Receive a daily update on your cellphone with all our latest news: click here.
Get the best of our site emailed to you daily: click here.
Also from Business Insider South Africa:
- Telkom owes 50,000 people money – and no, that invoice is not a scam
- Cat says its new R8,000 smartphone is ‘truly rugged’ – so we gave it to a toddler
- Double billing glitch: Nedbank took money twice from Capitec clients
- These four smaller JSE-listed companies could thrive in a post-Covid world, analysts say
- The best road trips to take in SA - including some epic cross-country journeys