Against a backdrop of economic pressure and growing choice, affordability is increasingly shaping decisions on both sides of the rental equation.
"And for landlords, this seasonal churn is often seen as an opportunity to increase rentals. However, current market conditions suggest that automatic rent hikes may not always be the most effective strategy," says Ephraim Zaslansky, a director of leading Johannesburg property group Firzt Realty.
"The total amount of personal debt outstanding in SA is more than R2tn and, according to the latest figures from PayProp, tenants spend an average of almost 48% of their net income on debt repayments, despite the interest-rate decreases in the past year.
"On average, rent costs them another 31% of their net income, so many tenants who are on the move at this time of year will be actively looking to reduce their monthly expenses.
"They know that this year, like others, is bound to bring increases in school fees, insurance and medical-aid premiums, electricity and water tariffs, taxes and other costs over which they have no control. But they can do something about their housing costs, and they are definitely prioritising affordability as well as location whenever they move now, so that they can accelerate debt repayment and improve their financial resilience.
"Many other tenants are also specifically looking to cut rental costs now so that they can save a deposit and purchase a home of their own."
At the same time, he notes, tenants in the main economic centres currently have more rental choices than they’ve had in years. "In Johannesburg in particular, the past six months have seen a surge in new residential developments close to business hubs and transport corridors, and this increased supply is placing pressure on older rental stock to remain competitive.
“In this environment, landlords who rely solely on rental increases to improve returns may find themselves facing longer vacancies, and a vacant property can quickly cost more than a modest or deferred increase.
“For example, an inflation-related increase of 4% on a property currently renting for the national average of R9,300 a month might only bring in about R4,500 of extra income a year, but you could lose more than double that amount if the property is vacant for just one month because tenants regard it as overpriced.”
So what landlords should focus on, says Zaslansky, is trying to improve both demand and tenant retention by looking at the overall value proposition of their properties. Practical steps include:
In summary, Zaslansky says, landlords who take a broader approach and acknowledge tenant needs in terms of value, convenience and affordability are much more likely to achieve long-term success, in the form of stable occupancies and reliable rental income for years to come.
