28 Nov 2012
In Q3 2012, 71 percent of tenants paid rent on time, 9 percent made partial payments, 12 percent paid late and only 8 percent did not pay rent.
This is according to the Tenant Profile Network (TPN) Rental Payment Monitor Q3 2012.
According to the report, tenants rental payment performance improved in all categories across rental value brackets and regionally.
Writing in the report, TPN managing director Michelle Dickens says the 50 basis point cut in prime interest rate may have offered a small amount of relief.
However, she says the increase in unsecured lending of 36.12 percent year-on-year (y/y) and credit facilities of 43.14 percent y/y raises the concern that tenants are using credit to pay for monthly living expenses and this is unsustainable.
TPN reveals tenants at the lower end of the market – those paying monthly rentals of less than R3 000 remain the most unreliable, followed by the top end (rent above R12 000 pm) with the middle categories (R3 000 – R7 000 and R7 000 – R12000) faring best.
Regionally, the Eastern Cape (89 percent) and Western Cape (87 percent) continue to record above average collections, Mpumalanga (89 percent) and Limpopo (85 percent) similarly reflect quality tenants while Gauteng (80 percent) and KwaZulu-Natal (81 percent) continued to perform below average.
Dickens points out that of those tenants who did not pay rent, the Eastern Cape recorded (6 percent), Western Cape (6 percent), Mpumalanga (5 percent), Limpopo (5 percent) while the figure was high in Gauteng (11 percent) and KwaZulu-Natal (12 percent) indicating that tenants in Gauteng and KwaZulu-Natal are twice as likely to skip a month’s rent.
“One of the reasons identified by TPN as a possible explanation for these provincial payment trends was suggested by looking at overall credit granted to the population per province.”
Gauteng appears to be the most heavily indebted at a factor 3.95, with Eastern Cape and Limpopo the least in debt at a factor 1.03 and 0.77 respectively, she explains.
TPN says the national average rental price achieved double digit escalations at 10.36 percent y/y.
Nationally the average rental is R5 102, while Mpumalanga has the highest average rentals at R5 590, Western Cape R5 343, Gauteng R5 226, Limpopo R5 003, KwaZulu-Natal R4 829 and Eastern Cape R4 328.
Dickens notes that the Census 2011 data indicates that of South Africa’s 14 450 million households 3 612 million (25 percent) reside in rented accommodation and 77.6 percent live in formal dwellings.
Gauteng (37.1 percent) and the Western Cape (28. 9 percent) have the highest proportion of rented tenure while in the Eastern Cape (14.9 percent) and Limpopo (12.6 percent) of households live in rented homes, she adds. – Denise Mhlanga
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