DESPITE the tough economic times, tenants paying rent in the Eastern Cape have among the best payment behaviour in the country.
The Rental Payment Monitor, compiled by property research group Tenant Profile Network for the second quarter of the year, found the Eastern Cape had a 86% good standing payment trend, which was above the national average of 85%.
“Eastern Cape tenants as a group have long performed above par, but the disparity between Nelson Mandela Bay and Buffalo City is quite remarkable. Nelson Mandela Bay records a 90% good standing rating with only 4% of its tenants in the did-not-pay category, which is vastly different to Buffalo City where just 78% of tenants are in good standing and a sizable 10% are in the did-not-pay category,” the report found.
The average monthly rent for Nelson Mandela Bay in the second quarter of the year was R4713 with a minimum average rent of R1400 and a maximum average rent of R14445. In Buffalo City, the average rent was R3661, with a minimum of R1500 and a maximum of R5000.
Port Elizabeth-based Just Property Group chief operating officer Paul Stevens said the letting agency has screening processes for potential tenants and the right policies and procedures in place to ensure minimal defaults.
Stevens said Just Letting, which is a division for the Just Property Group, has an overall default rate of 1.5% with only 1% average default rate in Nelson Mandela Bay and in Buffalo City it is 3%.
“Nationally rentals have increased by between 6 and 8% in two years. But in Nelson Mandela Bay and Buffalo City we have experienced rental increases of between 8 and 10%,” Stevens said.
He said the biggest concern for the rental market today is that South Africans could go the same way as Americans with a low income to debt ratio resulting in less disposable income.
In addition to this global phenomenon, the prime lending rate in the country, which has not increased in six years, had this year seen two increases.
“This directly effects the landlord and the rental income they demand or expect to cover their investment,” Stevens said.
The Rental Payment Monitor for the second quarter of the year found that top-end tenants were the first to feel the pinch of increasing interest rates on overall budgets as they generally are more credit active. In the rental income bracket bigger than R25000, only 51% of tenants paid on time while 66% of tenants who paid rent below R3000 paid on time. – Cindy Preller