Worrisome drop in rental payments

FEWER people are able to make their rental payments in the province.

This was the finding of TPN credit bureau, in its TPN Residential Rental Monitor for the last quarter of last year. The report found “a worsening in residential rental performance, marking a worrisome change in tenant payment behaviour for the first time in three years.

“This reversal is a sudden change for landlords and property managers who have been enjoying an unusually long period of improving rental payments”.

Three of the major rental provinces that deteriorated most, were Gauteng, KwaZulu-Natal followed by the Eastern Cape, with only the Western Cape remaining flat, TPN managing director Michelle Dickens said.

“72% of tenants remained in the paid-on-time category. The deterioration is, however, reflected in the movement of tenants who paid-late to the partially- paid segment, highlighting a growing multitude of over-indebted consumers who find themselves unable to make full and timeous payments on their credit and monthly living expenses.

“The decline may be slight, but nonetheless could be seen as a warning sign,” Dickens said.

Dickens said tenants now look for more affordable properties, with the majority of the market (61%) renting for between R3000 and R7000 per month.

The TPN Commercial Rental Monitor for the last quarter of last year found “late payments continue to pose a challenge nationally, as nearly one in four commercial tenants paid rent after the due date, with the most negatively affected regions being the Eastern Cape and KwaZulu-Natal where more than one in three tenants are consistently late payers”.

Rube Geyer of KG Property Solutions said the Port Elizabeth-based property company had “definitely experienced that a lot of the tenants only get temporary employment contracts which causes them to default once their contract has expired”.

Her advice to property owners finding themselves in this predicament is to make sure they use a reputable rental agent who does sufficient credit and reference checks. Owners can also insure their rental income, in the case of tenants defaulting or having to deal with an eviction.

Geyer said tenants who are feeling the pinch, should seek financial advice before their first default.

“When they realise that soon they will not be able to make ends meet, they should contact the rental agent and make arrangements – they should not switch off their phone and ignore e-mails and pretend the issue does not exist,” Geyer said.

“If a reduction or postponement in rental is not possible, they may wish to see a debt counsellor, who, while not able to reduce the amount owing on their lease, may be able to reduce other amounts on credit agreements and thereby freeing up funds that can be put towards their rental,” Lew Geffen Sotheby’s partner Thomas Lawrence said. – Cindy Preller

 

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