Pretoria - The percentage of tenants in good standing in the residential rental market improved slightly in the fourth quarter of last year despite the challenging economic environment.
The latest residential rental quarterly rental monitor by TPN credit bureau revealed that tenants in good standing improved slightly to 84.97 percent in the fourth quarter of last year from 84.7 percent in the previous quarter.
This was the second consecutive quarterly improvement in the percentage of tenants in good standing since the 0.01 percentage point fall to 84.26 percent in the second quarter of last year.
The “in good standing” category includes tenants who paid on time, paid in the grace period and paid late.
TPN said 68.91 percent of tenants nationally were in the “paid on time” category in the fourth quarter while 5.28 percent made their payments during the grace period and 10.78 percent paid late.
Read also: Reluctant bond market dries up SA property deals
The report said rental payments clearly remained a priority for most tenants, with 9.65 percent making a “partial payment” and only 5.38 percent in the “did not pay” category.
Top segment risks
TPN said 81 percent of tenants rented for less than R7 000 a month but there were distinct differences in the percentage of tenants in good standing in the five brackets. The lower income segment at less than R3 000 a month and the luxury income segment at more than R25 000 a month both remained the most challenging from which to collect rental.
TPN said the “sweet spot” was in the affordable income segment, which is classified as rentals between R3 000 to R7 000 a month, and the middle income segment where rentals range between R7 000 and R12 000 a month. It added that 75 percent of tenants paid on time in the middle income segment compared with only 54 percent in the luxury segment.
TPN said the percentage of tenants in good standing ranged widely from 77 percent for luxury rentals to 88 percent for middle income rentals.
It said the biggest drop in the percentage of tenants in good standing was in the luxury market, where it fell to 77.47 percent from 86.31 percent in mid-2013.
TPN said the Western Cape at 88.7 percent and Eastern Cape with 88.2 percent of tenants in good standing both always showed a solid rental payment performance. The provinces with the poorest rental performance were Free State with 81.1 percent of tenants in good standing, followed by KwaZulu-Natal at 81.2 percent and North West at 83.2 percent.
BUSINESS REPORT