Residential Rental Monitor 2020 Q1

Preliminary residential tenant payment behaviour for 2020 Q1 has deteriorated significantly enough to necessitate an early release of the data to the market. 

In the last quarter of 2019, we noted that tenant good standing had remained stable for the year; but both Moody’s and S&P changed their outlook from stable to negative, Eskom plunged the country into stage 6 load shedding and subsequently, South Africa recorded a second quarter of negative growth, -1.4%. 

Enter 2020, the financial pressure is alarmingly reflective in the first quarter rental payment analysis. Landlords have come to know quarter 1 as the holiday hangover quarter. 

Tenants suffered their biggest decline, an 11% drop in rental good standing in Q3 of 2008 during the global financial crisis. All the subsequent noticeable deterioration of rental good standing was seen in the first quarter:

2009 Q1:
-4% drop in rental good standing.
Immediate recovery of 6% improvement in quarter two.
2016 Q1:
-2.8% drop in rental good standing (the post Nenegate quarter).
Immediate 2.9% improvement in quarter two.
2020 Q1:
-3.31% drop in rental good standing.

TPN wants to highlight that rent is paid in advance on 1 Jan, 1 Feb and 1 Mar, and as such the National State of Disaster and Lockdown have had very little impact on Quarter 1 data. 
The reality is that the National State of Disaster and Lockdown will undeniably affect the second quarter tenant behaviour. 

24.16% of tenants listed as Did Not Pay for April

Early April data shows a deterioration of 3.94% of tenants who paid on time in these first 7 days of this month. Currently, by the 7th of the month, 24.16% of tenants are listed in the Did Not Pay category. 

Thankfully, there is still 3 weeks of April left for landlords and property managers to collect April’s rent. 

Early interventions like understanding your tenant’s current income situation will be a key driver in determining the best course of action to limit current non-payment and future exposure. 

The TPN Rental Recovery Pack is available for free on the TPN Shop. Documents include the Tenant Income Declaration Application, Deposit Utilisation Agreement and Rental Deferment Agreement. 

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