Landlords Must Choose Tenants Wisely

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27 Jul 2012

Economic hardship is putting tenants under pressure, creating problems for landlords and affecting the quality of rental properties. 

Johannessen explains that non-payment or late payments are creating headaches for landlords, many of whom are already under pressure to keep up with the bond, rates and levy payments on investment units bought during the boom years.

This is according to Ricci Johannessen of Aida Milnerton, whose office manages a large rental property portfolio, who says there are now clear signs that some tenants are struggling to pay their monthly rentals. 

High electricity and fuel costs impact a wide range of consumer prices and many people are struggling to make ends meet, he says, while retrenchments are also becoming more common as companies struggle in the current economic climate. 

Johannessen explains that non-payment or late payments are creating headaches for landlords, many of whom are already under pressure to keep up with the bond, rates and levy payments on investment units bought during the boom years. 

"Their expectations of good returns have been dashed and in many cases their units are losing value - in areas where non-payment is endemic, maintenance is being neglected and whole blocks of flats or specific neighbourhoods become notorious, which in turn affects rentals that landlords can realistically expect tenants to pay." 

Compounding the problem for some landlords are unscrupulous operators acting as rental agents, Johannessen says. “Cases are surfacing where landlords take steps against tenants who are late with payments, only to discover that the ‘agent’ has received the money but neglected to transfer it to the landlords' accounts." 

He says they've had several cases recently where landlords have approached them to help in this regard and have found that in many instances, the so-called agent is not registered with the Estate Agency Affairs Board (EAAB) and does not even have a trust account as required by law. 

It is difficult, time consuming and expensive to seek redress and it is vital that landlords take great care when selecting managing agents to avoid this sort of problem, advises Johannessen. 

He says landlords should choose their agents as carefully as their tenants to minimise financial exposure. A good managing agent will screen tenants very carefully by subscribing to a professional and reputable registered credit bureau like TPN – Tenant Profile Network.  

He advises landlords to make sure that prospective agents have a current and valid fidelity fund certificate, that they are indeed registered with the EAAB (by searching on the consumer page at, that they have the necessary infrastructure to collect rentals on time such as the Payprop collection and payment managing facility,  and to conduct inspections of rental properties. 

Rentals in the Milnerton area range from around R4000 per month for one-bedroom flats up to R25 000 for executive homes in upmarket golf estates. 

Johannessen adds that interest among first time buyers in the area is rising, especially in the lower price brackets. Entry-level buyers with steady employment target homes in the R400 000 to R850 000 range. “However, banks are still very selective in granting bonds, which depresses the market.” 

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