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When money is tight, and purse strings are thus tightened, it’s often the luxury and recreational spending that is curbed first.

When you’re in the midst of a pandemic, and the country has seen a “devastation of economic activity and of people’s ability to earn a living”, even paying the bills becomes a daily struggle, with rent one of those.

Not a great time to be a landlord or a tenant, then, although the latter does have a few cards to play.

According to Payprop’s latest rental index, which has been unpacked by Moneyweb, landlords are struggling on two fronts.

Firstly, there is the fact that upwards of 25% of tenants are in rental arrears, with the amount owed steadily increasing since lockdown began.

By June, according to Payprop, those in arrears owed more than one month’s rent. This number – at 105.8% of rent per month – is far higher than the 77% of monthly rent as at March.

When delving deeper into the arrears amounts, by June nearly 40% of those in arrears owed between one and one-and-a-half months’ rent (100-150%). This is “more than double the share of clients in this band of arrears in March”.

Add the 15% that have arrears in excess of 150% of their monthly rent, and the scale of the problem is visible.

Then there’s the problem of increasing vacancies, with a report from TPN Credit Bureau showing that vacancies have passed 11%, up from around 9%, with the high-end rental market taking the biggest knock.

Michelle Dickens, MD of TPN Credit Bureau, makes the point, however, that “now more than ever, a vacant property is preferable to a squatting tenant”.

“‘Lockdown’ regulations have dramatically suspended landlords’ rights to execute on their eviction orders,” she says.

This graph, from TPN’s Vacancy Survey, shows the breakdown in each rental bracket:

Rentals upwards of R25 000 a month have a 23% vacancy, and those less than R3 000 a month 17%.

Dickens went on to say that for tenants who still have an income, the power lies in their hands:

“Landlords should brace themselves for price negotiation and competing tenant incentive take-on benefits like zero deposit, first month rent free, new appliances and free WiFi.”

… “It is clear as day that landlords are under immense pressure with no end in sight. The impossibly difficult times we have been in are not yet over by any means.

If your lease is coming up for renewal soon, it might be worth considering the bargaining tools at your disposal.

You can read Moneyweb’s breakdown of both of the reports mentioned above here.

[source:moneyweb]