How to retain reliable tenants in 2024
The rental market has been active for some time now, but with interest rates beginning to settle, market conditions might soon change. Landlords will need to keep a close eye on their local property market to make sure they are able to retain and attract reliable tenants in the year ahead.
Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, says that the property market has been favouring landlords for some time now. But, with interest rates expected to stabilise and hopefully decrease slightly at some point during the year, Goslett suggests that landlords keep in touch with their local real estate practitioner to stay on top of trends as things change.
According to the latest Q3 2023 PayProp Rental Index, the average rent rose year on year by 4.7% in July, 4.4% in August and 4.9% in September – the highest YoY growth seen in any month since 2017. The report also states that “[n]ationally, 17.5% of tenants were behind on their rent in Q3 2023, compared to 18.4% in Q2. This is the lowest figure seen since we began tracking rent arrears in the PayProp Rental Index in 2020.”
Commenting on this, Goslett says that, coming off a year of high interest rates and high inflation levels, affordability is likely to remain a concern for consumers in the year ahead. “Landlords who have reliable tenants should keep this in mind before applying any annual rental increases. Although the rate of defaulting tenants is decreasing, it is sometimes better to hold onto a reliable tenant than to take on the risk of finding a new tenant,” Goslett suggests.
He adds that if interest rates do come down, making home loans slightly more affordable again, there might just be a dip in demand for rental properties. That being said, he also notes that it will take some time for interest rates to be appealing enough for aspiring homeowners to take the plunge and to move away from renting.
“The key to success as a landlord is keeping one ear to the ground so that you know when and by how much to adjust your rental rates. Each suburb will have its own nuances, which is why it is so useful to pair up with a local real estate agent,” says Goslett.
If a landlord is in need of finding a new tenant in the year ahead, apart from using a rental agent to properly vet and screen the potential tenants, setting a fair rental amount will also be crucial to attracting a reliable tenant. “The most responsible tenants also tend to be the most well-informed tenants who know what comparable rentals cost,” he warns.
As a final word of advice, Goslett says that the year ahead holds plenty of opportunity for landlords and tenants alike. “To get the most out of whatever market conditions you find yourself in, partner with a reliable real estate professional for advice you can trust,” he concludes.
For more real estate advice or to get in touch with your nearest RE/MAX Office, visit www.remax.co.za.
