It shouldn’t be a big surprise to see the rental market activity picking up! After all, just the combination of an economy in a recession and political uncertainty is already enough to make any serious home buyer think twice before locking himself into a 20-year bond repayment arrangement. Landlords are facing more potential tenant candidates, and have been increasing the selecting criteria for the ‘right tenant’. Creditworthiness has suddenly received a lot more attention, as you’ll read in this very interesting article!
Why Creditworthiness Is Just As Important For Tenants
In South Africa’s highly competitive rental market properties are in high demand and short supply.
With economic uncertainty and the rising cost of living placing pressure on consumers, many have put their homeownership aspirations on the backburner and are opting to remain in the rental market for the meanwhile. As a result, demand in the rental market has continued to increase, making it more and more difficult for tenants to find a suitable rental property.
Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, says that the competition for rental property coupled with changes in legislation has led to landlords and rental agents scrutinising each potential tenant, which has also made it harder for tenants to find a rental property.
“The Prevention of Illegal Eviction and Unlawful Occupation of Land Act 19 of 1998 (PIE) and the Consumer Protection Act 68 of 2008 (CPA) have made it more difficult to evict tenants, even those who default on the rental payment. As a result, landlords and management agents have introduced more stringent screening criteria to ensure they select the right tenant from the start. In today’s market, the creditworthiness of a tenant has become more important with landlords starting to check credit reports to establish whether the potential tenant has a clean credit history,” says Goslett.
While once reserved for those looking to purchase a home, being credit-worthy is just as important to tenants in the current market.
“Much like a bank will run credit checks before they approve a bond, landlords and letting agents are also running checks because they want to make sure that the tenant they select is both willing and able to time their bills on time,” says Goslett. “Regardless of whether the tenant has a high income and the money to pay the required deposit – a clear credit record is a must.”
According to Goslett, a favourable credit score and clean credit record is a valuable asset when applying for a rental property. Each year consumers can obtain a free credit report from the credit bureaus within the country to assess their financial position. He notes that it is advisable for tenants to know your credit score and check your credit record for any inaccuracies.
“Any missed, or slow payments will have a negative impact on a consumer’s credit score. However, it is also important to be mindful of the less obvious credit infractions such as opening too many accounts, numerous credit enquiries, co-signing for a third party or only paying the minimum required payment. All of these things will impair your records and could scare off landlords,” Goslett explains.
He provides prospective tenants with tips to avoid adverse information on their credit history:
• Read all clauses before signing a contract with a creditor
• Make regular payments to creditor by the 7th of each month
• Keep a list of all creditors, the basis of credit and amount to be paid
• Keep a record of all payments made to creditors
• If you relocate, notify all creditors of the change of address
• Attend to all correspondence from creditors or their legal representation
This article was issued by RE/MAX Southern Africa – http://www.remax.co.za/