Nationally, the number of tenants in good standing with their rent is declining. Picture: Cottonbro Studio/Pexels
Tenants in the Western Cape are the most committed to paying their rent while, at the other end of the scale, the highest number of squatting tenants live in KwaZulu-Natal.
TPN’s latest Residential Rental Monitor for the first three months of 2023 reveals that 5,09% of tenants in KZN are not paying their rent, an increase from 4,67% in the fourth quarter in 2022.
Gauteng is only marginally behind in the number of squatting tenants at 4,58%.
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When it comes to rental payment performance by rental band, the report states that tenants paying R3,000 or less a month – the lowest rental band – continue to struggle to pay their rent, with a continued deterioration of tenants in good standing.
Tenants paying between R7,000 and R12,000 have been the best-performing category of tenants since 2014, with the highest proportion of tenants in good standing of all rental bands, says Waldo Marcus, industry principal at TPN Credit Bureau.
This is followed by tenants paying between R12,000 and R25,000 per month.
Tenants that are not in good standing with their rent are not just confined to KZN though, as, nationally, this number has deteriorated in all provinces. Waldo Marcus, industry principal at TPN Credit Bureau says the decline has occurred for three consecutive quarters as economic challenges continue to filter into households.
This mirrors the result of the National Credit Regulator’s age analysis which indicates that almost all consumer credit types in good standing deteriorated slightly in the same time period. TPN’s Squat Index, defined as the number of tenants who on a monthly basis fall into a category of non-payment, has also seen an increase in the last two quarters, he says.
“Although overall sentiment in the (residential rental) sector remains positive, property owners need to consider how a tenant’s late or no payment will impact them. Tenants classified as squatting pose a severe risk to the ability of landlords to collect and recover rental due. Landlords, therefore, need to act proactively and utilise the various legal tools available to them to collect the outstanding rental.”
Marcus further advises that escalations should be considered cautiously given that consumers are under extreme and ever-increasing pressure.
“Landlords need to take advantage of the current market strength but bear in mind that there is an upward trend in the number of tenants classified as squatting. They, therefore, need to ensure that adequate tenant risk monitoring is implemented to mitigate the risk of an increase in defaulting tenants.”
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