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- Most property professionals surveyed by PayProp had to make alternative rental payment arrangements because of the impact of the pandemic on tenants.
- The biggest headache for rental professionals is finding quality tenants, the survey shows.
- About 71.5% of survey respondents said they implemented lower than usual rental increases in 2021.
Affordability remains an issue for many residential tenants, and 90% of property professionals surveyed for the third annual PayProp State of the Rental Industry report said they had to make alternative payment arrangements in 2021 due to the impact of the pandemic.
Just as in 2020, the latest survey indicates that the biggest headache for rental professionals is finding tenants that meet their requirements.
Many tenants lost their jobs or at least part of their income, and the unemployment rate is at an all-time high. This meant that rental payments took a hit, though most did manage to meet payment agreements. About 42% of survey participants said more than 75% of tenants are paying as agreed, while 26.5% reported that 50% to 75% of tenants are keeping up.
Less than a third of respondents said fewer than 50% of tenants paid as agreed during the pandemic.
PayProp data indicates that rental arrears peaked in 2020, but have been improving steadily since. About 71.5% of survey respondents said they implemented lower than usual rental increases in 2021.
Rental growth has remained sluggish over the past two years. National rental growth has been below 1% for four consecutive quarters according to PayProp's latest quarterly rental index (for the third quarter of 2021). The rental index shows year-on-year rental growth barely moved the needle, measuring 0.1%, 0.3% and 0.2% in July, August and September respectively.
An overview of average rent per province in the third quarter shows: Eastern Cape (R6 217); Free State (R6 295); Gauteng (R8 235); KwaZulu-Natal (R8 232); Limpopo (R7 024); Mpumalanga (R7 699); North West (R5 257); Northern Cape (R8 069); and the Western Cape (R9 266).
About 53.6% of respondents to the State of the Rental Industry 2021 survey said landlords are downsizing their portfolios, while just 7.1% said landlords are looking to expand. According to the report, this could indicate that landlords do not view the current property market as a good investment, perhaps deterred by subdued rental growth.
The survey identified two main reasons why tenants decide to move, namely to buy their own homes or opting for smaller, more affordable rental properties. Other reasons include moving to a property that could better accommodate working from home or moving to be closer to family.
