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Sandton. Image: Blackrick
- Nearly a fifth of residential rental properties in Sandton, Soweto and eThekwini are now vacant as tenants lose their jobs and move out.
- Demand is at an all-time low, while property supply remains high, says Tenant Profile Network, a credit bureau that tracks tenants’ payment behavior.
- 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 more difficult than ever, as the coronavirus crisis continues to destroy livelihoods.
Data from the Tenant Profile Network (TPN), the largest credit bureau that tracks tenant payment behavior in South Africa, shows that more than 11.4% of rental properties are now vacant, as the loss of Jobs wreak havoc on demand.
According to data from TPN, the demand for rental properties is now the lowest on record, while supply is at an all-time high. This resulted in the number of vacant rental properties increasing by more than 50% since the beginning of the year.
(TPN)
“For those renters with incomes, it’s a tenant market. Landlords should prepare for price negotiation and competitive renter incentive benefits like zero deposit, free first month’s rent, new appliances, and free WiFi, ”says Michelle Dickens, CEO of Tenant Profile Network (TPN).
FNB expects residential rental prices to soon begin to drop more than a year ago, as struggling tenants return to 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.
READ | You could soon rent for less than last year, as landlords may struggle to get tenants
“Until jobs recover, 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, rents over R25,000 per month, are now vacant, while the vacancy rate is around 10.3% for properties with rentals of R4,500 to R12,000 a month.
(TPN)
The worst affected areas are Gauteng and the Western Cape.
In Gauteng, TPN reports “staggering” vacancies in Randburg (18.3%), Sandton (19.2%) and Soweto (19.4%).
(TPN)
There is an oversupply of properties in the Western Cape, likely driven by the number of Airbnb properties seeking long-term tenants due to the impact of the extended ban on short-term rentals, says TPN. Airbnb rentals weren’t banned until recently due to lockdown regulations.
(TPN)
There is a “carnage” of vacancies at eThekwini at 19.4% of all properties, but TPN says there is still positive demand, particularly on the North Shore.
(TPN)
The 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 might be better than staying with a non-paying tenant.
Residential eviction orders at alert level 3 were granted with a stay of execution for five to ninety days after alert level 3 ended. “That means some homeowners who got eviction orders at alert level 3 now have to wait until November 17 to execute them. Meanwhile, the tenants live without paying rent. Now more than ever, a vacant property is preferable to a squatted tenant. “
“It is understandable then that a vacant property is a difficult but not disastrous situation, given that landlords feel even greater challenges with tenants who they cannot immediately evict even though an eviction order has been granted.”
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