Rental Index Report Shows Ave Rent Went Up Only R10
Rents Gone Up By Only R10 Over 12 Months
A recent report by PayProp reveals that rental amounts have stayed nearly the same across the country over the past year. This is a dramatic effect of the Covid-19 pandemic and the glut of rental properties flooding the market.
In years gone by it was not uncommon for rental amounts to go up between 7 – 10% annually and landlords would automatically build such increases into their lease agreements. Now, in the wake of Lockdown and with the ongoing Pandemic big changes have happened to the way people are renting.
‘In years gone by it was not uncommon for rental amounts to go up between 7 – 10% annually’
A large number of tenants were forced to consider moving either (1) back home to stay with family or (2) into a cheaper place to live.
Many tenants also entered negotiations with existing landlords to keep prices the same or even reduce them in exchange for them staying on and renewing their lease.
An Over Supply Keeps The Prices Low
Due to economic pressure, more people are looking at renting rather than trying to borrow money from the bank to buy a place and take on the risk of a 25 year agreement where if they miss one or two months they could lose their investment. The banks too are finding it hard to give consumers the bonds they are looking for as property prices as still somewhat high from pre Pandemic levels and only slowly lowering.
‘People who are earning less are also looking for better prices’
People who are earning less are also looking for better prices. Rental properties with prices that are too high are standing empty and this is placing financial pressure on landlords who have financed the property via a bond. Every month the place stands empty they are having to pay the bank themselves.
Many people have also decided to share accommodation (in many cases a larger house or apartment) in a measure to slash their monthly rental costs by almost 50%.
Due to the sudden drop of tourists, many places that ran short term Airbnb decided to try to get long term local tenants and this also contributed to a sudden glut of places for rent, driving the prices lower.
Everyone Has Bad Credit Scores
Landlords are also finding that potential clients are all having impaired credit reports (when they pressure potential clients into giving them permission to draw such reports – which government wants to try stop happening).
These bad credit scores are confusing to landlords who would previously rely on this information to choose tenants. Now, when everyone has a poor score, who do they choose?
What is the Average?
The national average rental price (across places of all different sizes and capacity and across all areas) is R7854.
This is only a R10 increase over the previous years average.
If you are under financial pressure then talk to your landlord about a price freeze or even a price reduction. If you don’t ask you won’t get.