Landlords must retain good tenants
RE/MAX Southern Africa explains the importance of retaining reliable tenants in an ever-changing economic climate.
The rental market has been active for some time now, but with interest rates beginning to settle, market conditions might soon change. Landlords must keep a close eye on their local property market to ensure they can retain and attract reliable tenants in the year ahead.
Adrian Goslett, the regional director and CEO of RE/MAX of Southern Africa, says the property market has favoured landlords for some time now. But, with interest rates expected to stabilise and, hopefully, decrease slightly at some point during the year, Goslett suggests landlords keep in touch with their local real estate practitioners to stay on top of trends as things change.
According to the latest quarter three (Q3) 2023 PayProp Rental Index, the average rent rose year on year (YoY) by 4.7% in July, 4.4% in August and 4.9% in September – the highest YoY growth seen in any month since 2017. The report also states that “nationally, 17.5% of tenants were behind on their rent in Q3 2023, compared to 18.4% in Q2. This is the lowest figure seen since we began tracking rent arrears in the PayProp Rental Index in 2020.”
Commenting on this, Goslett says affordability will likely remain a concern for consumers in the year ahead despite coming off a year of high interest rates and inflation levels.
“Landlords with reliable tenants should remember this before applying annual rental increases. Although the rate of defaulting tenants is decreasing, it is sometimes better to hold onto a reliable tenant than to take on the risk of finding a new one,” Goslett suggests.
He adds if interest rates do come down, making home loans slightly more affordable again, there might be a dip in demand for rental properties. However, he also notes that it will take some time for interest rates to be appealing enough for aspiring homeowners to take the plunge and move away from renting.
“The key to success as a landlord is keeping one ear to the ground so you know when and by how much to adjust your rental rates. Each suburb will have its own nuances, which is why it is so useful pairing up with a local real estate agent,” says Goslett.
If a landlord needs to find a new tenant in the year ahead, apart from using a rental agent to properly vet and screen the potential tenants, setting a fair rental amount will also be crucial to attracting a reliable tenant.
“The most responsible tenants also tend to be the most well-informed tenants, who know what comparable rentals cost,” he warns.
As a final word of advice, Goslett says the year ahead holds plenty of opportunities for landlords and tenants alike.
“To get the most out of whatever market conditions you find yourself in, partner with a reliable real estate professional for advice you can trust,” he concludes.
