The pandemic stricken South Africa placed immense financial pressures on many households in South Africa since the middle of 2020. Many tenants' income was cut and many were retrenched. The effects of the financial strain could immediately be seen on the rental market.
Tenants defaulted on rent and accrued sizeable rental debt and many tenants vacated sooner than later to limit personal risk as well as that of the Landlords'. The rental market quickly showed a large increase in vacancies and due to the oversupply of properties a decrease in rental prices followed.
Now, a year after the rental market was hit worst, the rental market has seemingly stabilised with signs of positive growth. Most tenants have been able to recover financially and have settled their debt. Vacancies have also decreased which has led to slight increases in rental values.
The low interest rates continue to put strain on the rental market. Many good paying tenants can afford to buy rather than rent which in turn leads to a continued oversupply of rental properties. In order to mitigate vacant rental properties Landlords are forced to market at very competitive rates which puts downward pressures on rental values.
Landlords' main priority should be to limit vacancy and to place qualified tenants in their rental properties. For this reason, it is very important for Landlords to consult with their area rental specialist to establish what a competitive rental value will be and to procure qualified tenants.
An overvalued rental property will remain vacant for prolonged periods in the current market. There are numerous similar properties to rent and should a property be overpriced it will lead to significant loss of potential income.
It is strongly advisable that Landlords appoint a reputable company to assist in the marketing of their rental properties. A specialist will be able to assist in mitigating the risks that the rental market faces leading to a better return on your investment in the long run.