A new survey by landlord-tenant matching platform Flow among 80 000 residential tenants on their database in South Africa, found that, due to the impact of the coronavirus pandemic, only 37% can afford to pay their rent in full in May, while 22% said they cannot pay their rent at all.
During a webinar hosted by FlowFindings on Wednesday, Pam Golding Properties CEO Andrew Golding said they are finding about 20% of their tenants not able to pay their rent. At the same time, it is hard to predict the impact of the lockdown on both sales and rentals, as it is still early days.
“People are having to find creative ways to pay what they can. Some say they are borrowing money from friends or family or extending the terms of personal loans,” said Golding.
He expects that, going forward, more people will be looking at renting than buying, due to affordability concerns against the backdrop of the impact of the pandemic on the economy.
About 42,72% of tenants surveyed by FlowFindings said they are relying on their salaries to pay their rent, 30,09% on their savings and 21,6% have to use loans.
More than half (55%) of respondents said they have either already applied or intend to apply for financial assistance to help pay their bills.
The survey shows that tenants across the board are affected, from those paying high-end rentals of R12 000 and more per month to low-end rentals of between R2 000 and R3 999 per month.
“Annual rental escalations are stagnant and we’re looking at a possible reversion of rental amounts,” said Just Property CEO Paul Stevens. “It’s not only the middle class being affected – it’s hitting everywhere.”
Trafalgar Property Management MD Andrew Schaefer pointed out that the rental market was already under pressure before the lockdown, and circumstances have since deteriorated. He does not expect that tenants will be able to catch up with their rental arrears any time soon. In his view, “rental credits” given by landlords to tenants might end up being the only way forward.
About 32% of tenants surveyed indicated that they are likely to move out after lockdown bans are lifted. About 12,63% of those said it is due to their lease ending, while 50,93% said it is due to lockdown-related affordability issues.
This much greater than normal inability of tenants to pay their rental, in turn puts landlords at risk, according to the Flow company co-founder and CEO Gil Sperling.
The survey found that landlords have accommodated 35% of renters with reduced or waived rent.
It seems individual landlords (44%) were more accommodating about waiving or reducing rental payments compared to 24% of landlords who are companies and trusts being willing to doing the same. – Carin Smith, Fin24
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