Picture: 123RF/ AHOFOBOX
Picture: 123RF/ AHOFOBOX

One in every four tenants in SA does not fulfil their rental obligations — another sign that consumers are struggling.

PayProp, a residential letting transactions processor, measured an increase of five percentage points in tenants whose rent payments were in arrears over the past year.

"Nationally, we measured an increase in the percentage of tenants in arrears from 18.5% in April 2017 to 23.2% in March 2018," said PayProp’s head of data, Johette Smuts.

"This means that only 76.8% of tenants pay their rent in full every month and one in four doesn’t," she said.

The bad news in PayProp’s rental index for the first quarter of 2018 follows news from Statistics SA on Tuesday that gross domestic product (GDP) contracted by 2.2% in the first quarter of 2018.

Smuts said on Wednesday that the average amount of tenants’ arrears, as a percentage of their monthly rent, had also been increasing.

"In April 2017, the average tenant in arrears was just over 80% in arrears. In March 2018, this number was much closer to 100% — 96.4% to be exact, meaning the average tenant in arrears is almost one full month behind with their rent.

"Unfortunately, this is the trend we see for every province," she said.

SA’s residential sector has been under severe pressure, with rental growth having been on a downward trend since the beginning of 2017.

Year-on-year growth in January 2018 was just 4.5% nationally, slightly more than half the rate measured a year earlier, according to PayProp.

Growth slowed even more during February and March 2018, with both months registering rates below 4%.

Smuts said this was not such a big surprise if one compared rental growth with the trend in the inflation rate. "In March, the latter figure came in at 3.8% — the lowest year-on-year growth recorded in seven years."

The most expensive rental bracket, R15,000 a month and above, had the lowest percentage of arrears relative to rent, at 78.4%, in the first quarter of the year.

The lowest rental bracket — R1,000 and R2,500 a month — had the lowest percentage of tenants in good standing and the highest percentage of arrears relative to rent.

The arrears percentage relative to rent in this bracket has decreased slightly over the past six months, while increasing for every other bracket.