Increases in additional charges to residential tenants, such as the higher cost of electricity, are placing considerable strain on tenants, which in many cases translated into the non-payment of utilities bills, according to credit bureau TPN.
This was the explanation provided by TPN for the increase in the percentage of tenants who made only partial payments towards their rent, to 9 percent in the third quarter from 8 percent in the previous quarter.
However, TPN said tenant payment behaviour remained unchanged in the residential property sector, which possibly signalled that embattled consumers had “settled down to the discipline of striving to keep household expenses under control”.
TPN said the proportion of tenants who paid on time increased marginally for the second consecutive quarter to 68 percent. This category reached a low of 54 percent in the third and fourth quarters of 2008.
Tenants who paid late declined to 13 percent in the third quarter from 15 percent in the first and second quarters.
TPN said tenants who paid on time and those who paid late were viewed together as tenants in good standing, a category that declined to 81 percent in the third quarter from 82 percent in the previous quarter.
Tenants who did not pay their rent remained unchanged at 10 percent after peaking at 19 percent in the first quarter of last year.
TPN said its analysis continued to suggest that, in most households, the underlying reason for non-payment remained insufficient funds, usually due to loss of income or very tight budgets.
It was still common practice for tenants to use their deposits as the previous month’s rent, or give notice to cancel a fixed-term agreement with little or no warning, often mid-way through the lease.
A comparatively good payment performance existed among tenants in the R3 000 to R7 000 a month and R7 000 to R12 000 rental brackets, while the performance of tenants in the below R3 000 and above R12 000 rental brackets “remained weak”.
TPN said it was significant that only 55 percent of the tenants in the R12 000 and above rental bracket were in the paid-on-time category and 23 percent in the paid-late category.
Rental payments in the Western Cape and Eastern Cape continued to outshine those in KwaZulu-Natal and Gauteng.
The proportion of KwaZulu-Natal tenants who did not pay rent was 16 percent, or 60 percent above the national average. Tenants in this category stood at 12 percent in Gauteng, 7 percent in the Eastern Cape and 6 percent in the Western Cape.
In the commercial property market, the 9 percentage point improvement in tenants who had previously paid their rent late but now paid on time “was significant”.
Tenants in good standing in the commercial property market had remained fairly consistent in the first three quarters of this year. Those who made absolutely no payment during the month stood at 10 percent in the third quarter.
Reasons for non-payment or short payment of rent included bad debt within the leaseholding organisation, disputes regarding the maintenance of the commercial property, and disputes regarding additional charges such as electricity. - Roy Cokayne