Quality tenants are worth keeping

Landlords should not impose unreasonable rental increases in the next 12 months.

“Most tenants are feeling the pinch, thanks to higher interest rates and much higher water and electricity charges,” says Andrew Schaefer, MD of Trafalgar.

He says with further Eskom price increases ahead, as well as the other cost-of-living increases usually imposed in January, such as higher medical aid and insurance premiums and higher school fees, there is bound to be substantial resistance to rental increases that are perceived as unreasonable, that is, more than the current rate of inflation.

Landlords need to take into account that there is also a shortage currently of quality tenants who pay on time and in full every month, with the latest available figures showing that, in the R3 000 to R7 000 a month category, which accounts for the majority of tenants, only 73 per cent are paying on time and in full.

“This situation could get worse in the coming year, due to SA’s weak economy and growing employment uncertainty.

As it is, tenants with good credit and payment records know that it will be relatively easy for them to find alternative accommodation if their landlord puts up the rent too much.”Alternatively, in tough times, they might just decide to move in with friends or family and be lost to the rental market altogether.

Given all this, says Schaefer, landlords should keep in mind the costs they would incur if they had to find new tenants.

“In the first instance, there would be advertising costs and costs associated with cleaning, repairing and perhaps repainting the property,” he explains.

”Secondly, the danger of vandalism can increase when properties are standing empty, and they might have to pay for additional security.

“Thirdly, they would, of course, not earn rental income while the property is being prepared for new tenants and, even at an increased monthly rental for new tenants, it could take a considerable time to make up lost income.”

“In short, they may well find that after looking at what they stand to lose, it will be worth their while to cut their trustworthy tenants some slack this year and keep their rent increases to the minimum.”