Bugle Sales Talk Editorial

16th - 20th March 2015

Tenant Profile Network, a registered credit bureau and specialist service provider to the South African rental industry recently published its quarterly Rental Payment Monitor that provides interesting insights into tenant behavior in South Africa. The figures published for the fourth quarter of 2014 indicate that nationally, on average, 86% of tenants were in good standing. The best performing tenants were in the R7,000 to R12,000 per month bracket, with 89% of these tenants in good standing. The bracket just under this one, from R3,000 to R7,000 p.m. returned a 88% in good standing figure. The worst performing tenants were those paying below R3,000 p.m. with 80% of these tenants in good standing, followed closely by those tenants paying over R25,000 p.m. - 81% of these tenants were recorded as being in good standing. When considering the value brackets of rentals in South Africa we see that 83% of tenants rent for below R7,000 p.m. Only 3% of the tenant population rent for over R12,000 p.m. and 13% rent within the R7,000 to R12,000 bracket.

TPN refers to the rental group from R3,000 to R7,000 as the "sweet-spot" for residential rentals with 61% of tenants in this price range with consistently strong demand for properties to rent in this bracket. Only 4% of tenants in this category were recorded as "did not pay". The entry level tenants, those below R3,000, on the one hand, and the upper end of the average rental market, those above R25,000 p.m. continue to fare worst but for different reasons. The entry level bracket records the highest percentage of tenants who simply do not pay - 9% (nearly one in ten tenants) while the upper end of the market struggles most with late payments (16%).

When we consider rentals paid by Province the three top performing Provinces in terms of tenants in good standing are the Eastern Cape, Northern Cape and Western Cape, all at 89% of tenants classified as being in good standing. Limpopo follows closely with 88% of tenants in good standing. The next performance tier includes Mpumalanga at 87% and both the North West Province and Gauteng at 86%. Unfortunately KZN comes in at an unimpressive 82% (second last). The Free State brings up the rear with an outlying 78% of tenants in good standing. The Free State also had the highest number of tenants (9%) who did not pay. Fortunately KZN only had 6% of tenants who did not pay, but this is still twice the 3% of tenants in the Western Cape and Northern Cape who did not pay. Our low risk geographical areas are definitely the Western Cape, Northern Cape, Eastern Cape and Limpopo. As a landlord these statistics would make you think twice about investing in rental properties in the Free State.

TPN has provided details on which categories of credit are paid first by consumers. Consumers tend to pay their mortgage bond first followed closely by their rent. The roof over their head is therefore a priority.

For further information and an interactive analysis of this article follow my blog: andreaswassenaar.blogspot.com.

Andreas Wassenaar

Principal - Seeff Dolphin Coast

Cell: 082 837 9094

andreasw@seeff.com