The rental market has not been at levels like this since the 2008 financial crisis, says Paul Stevens, CEO of Just Property. Industry data analysts report that fewer than 80% of tenants are in good standing. What does that mean and how do you secure the right tenant for your rental property?
Tenants in good standing are a combination of tenants who paid on time, plus those who paid in the grace period and paid late. So, currently, more than 20% of tenants across South Africa do not pay their rent as they should. This trend was improving marginally in Q1 2021, but with South Africa back in Level 4 lockdown and restricted travel to the heart of the country, Gauteng, this may start to decline again.
“The challenge of finding good quality tenants, something the industry has battled with for the past few years, will intensify”, says Stevens. “While there is an abundance of tenant inquiries for property, tenants who actually qualify are becoming harder and harder to find”.
Rental insurance cover is not a prerequisite if you are a landlord. However, if any of the points below apply to your situation, you should consider it:
If you have new tenants and you don’t yet know how reliable they are
If you rely heavily on the rent you collect to pay the bond
If you are expecting turbulent times
If you simply don’t want to worry about rent payments and/or evictions
Even the most reliable tenants can experience financial difficulties which can result in
Non-payment or part-payment of rent (arrears)
Tenants cancelling their leases early (breach)
Tenants leaving without notice (absconding)
Arrears and breaches need to be managed decisively and can lead to eviction. On average, an unopposed eviction takes 8-10 weeks; that’s 3-4 months of lost rent during the time it takes to regain possession of your property. Imagine being certain that you will receive rental income even if your tenant doesn’t pay rent, cancels early or absconds.
Rental insurance may be what you need. Pros and cons of rental insurance:
It helps you identify and select the best tenants
Tenant application and vetting processes may scare off perfectly suitable tenants
It reduces your legal, financial, and personal responsibility
It comes at an additional cost
It mitigates legal issues
It reduces your risk
It gives you peace of mind
RENTSECURE is a type of landlord insurance that could cover your rental income, should your tenants be unable to pay their rent. The benefits of RENTSECURE include:
3 Months’ cover for loss of income due to tenant non-payment
One month’s cover for absconding tenants
One month’s cover for early cancellation
Up to R50 000 cover for legal fees related to rent recovery and/or eviction
No waiting period
RENTSECURE is available exclusively to Just Property landlords for only 3.5% (incl. VAT) of the monthly rental.
With Just Property and RENTSECURE, you’ll have all bases covered.