More Tenants Are Paying On Time
For the first time on record, only 5 percent of residential tenants were in the “did not pay” category in the third quarter of this year, according to credit bureau Tenant Profile Network (TPN).
It said the trend in this category for the past five quarters had been 6 percent.
TPN’s latest rental payment monitor for the third quarter added that overall 86 percent of tenants were in good standing in the third quarter, which at first glance indicated a fairly flat trend from the previous quarter but due to rounding masked the slight improvement in the “did not pay” category.
Tenants in good standing were a combination of the 73 percent of tenants in the “paid on time” category, 4 percent in the “grace period” and 9 percent the “paid late” categories.
TPN added that the National Credit Regulator’s credit provider report offered some interesting perspectives on consumers’ priority of payment behaviour.
“It is most apparent the security of ‘the roof over your head’ for the majority of consumers is the first payment they make each month, regardless of whether it is a mortgage or rented accommodation,” TPN said.
It said mortgage payment behaviour indicated that 91 percent of lenders had paid within the “current” category while “rent in good standing” came in at 86 percent.
TPN said both of these account payments had remained fairly consistent in their trend behaviour and had in fact shown improvement over the past four years.
By comparison, there have been consistent declines in the repayment of short-term credit to 73.2 percent, credit facilities to 70.01 percent, secured credit to 65.92 percent and unsecured credit, which showed the most significant, to 61.27 percent.
TPN said there was a clear indication that the majority of South Africans were looking for affordable, safe and well-maintained units with 87 percent of tenants renting for below R7 000 a month.
Of these, 24 percent rented for less than R3 000 a month and 61 percent for between R3 000 and R7 000 a month.
TPN said the R3 000 to R7 000 rental price category performed above the national average in terms of good standing at 87 percent and, most notably, only 4 percent were in the “did not pay” category.
In contrast, more than double that figure or 9 percent were not paying their rent in the below R3 000 a month rental price category.
TPN said it was evident that rental performance started to deteriorate in the upper-income brackets because of increasing late payments.
It said only 58 percent of tenants in the R25 000 plus a month rental bracket paid on time and 17 percent paid late.
On a provincial basis, TPN said 54 percent of tenant rental behaviour originated from Gauteng but, with the exception of the Free State, it remained the worst-performing province for rent collection despite showing the best improvement over time.
In both the Western Cape and Northern Cape only 3 percent of tenants were in the “did not pay” category, TPN added.
This article “More Tenants Are Paying On Time” was issued by TPN Credit Bureau SA – http://www.tpn.co.za/