Seeff’s rental agents have been busier than ever, making use of our rental partners and legal experts for advice and guidance to assist landlords and tenants to deal with the significant challenges of the Covid-19 Lockdown.
Throughout 2019, the residential rental market felt increasing strain with rental rates under pressure and a deterioration in rent payments. According to the TPN Rental Barometer, the market entered 2020 with about 81.88% of residential tenants in good standing. A further 15.65% of tenants paid in full, albeit late. Only about 11.14% of tenants made partial payment and 6.98% did not pay their rent at all. Vacancy rates stood at around 8.97%.
Heading into 2020 however, the market has been hit with a double whammy in the form of the Covid-19 Lockdown and the deteriorating economic climate. Many tenants are faced with reduced income and some will suffer the inevitable consequence of job losses. The lockdown also means that no evictions can take place while tenants are also not able to move to more affordable accommodation either.
Preliminary information from TPN indicates that almost 16% of tenants did not pay their full rent in April and a further 16% did not pay any rent at all, and TPN expects this to deteriorate further as the Lockdown progresses.
Where does this leave landlords and tenants?
While a level of activity can continue in the residential market, the reality remains that both tenants and landlords are in somewhat of a holding pattern until such time as the Lockdown is lifted to such an extent that movement can take place.
Nancy Oeschger, Rentals Manager for Seeff Blouberg says that she expects that post-Lockdown, there will be a great deal of movement as many tenants will look to downscale. There is still a good pool of quality tenants, but landlords will need to guard against high rental expectations or face vacancy increases.
Seeff’s top rental agents for the past six consecutive years, Sonya Garisch and Jacqui Bush expect the luxury areas across the Southern Suburbs and Constantiaberg to bounce back quite quickly and believe that a large majority of tenants will look to renew rather than move to alternate accommodation, but there could be an 'after-shock' in view of the extreme circumstances. For landlords, the adage of “if your property is priced correctly it will be let” will dominate.
Janine van Heerden, Rentals Manager from Seeff Hout Bay says that the area is very affordable to rent a house for your family with a beautiful garden and pool for the price of a small apartment elsewhere on the Atlantic Seaboard. But, she adds, landlords will need to work with agents to ensure their rental rates are market related.
Tenants should focus on keeping their credit record intact and speak to their agent or landlord if they are experiencing difficulties. There are options available to assist until the Lockdown is lifted, says Tiaan Pretorius, a property professional with Seeff Centurion.
He further highlights that rental stock is likely to increase as many sellers, especially developers, look to withdraw their properties from the sales market until conditions improve. A clear credit record, acceptable tenant profile and good references will remain vital criteria for tenants.
The decline in tourism will no doubt boost rental stock in many areas, but according to Kat Roth-Munnik, a rentals agent with Seeff Franschhoek, furnished units are not suitable for the long-term rental market and property owners will need to consider storage of furniture if they don’t want to suffer financial losses.
Author: Gina Meintjes, 18 May 2020, Rentals