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The rents have only increased by R10 within 12 months
A recent report from PayProp shows that rental amounts have remained nearly the same across the country over the past year. This is a dramatic effect of the Covid-19 pandemic and the flood of rental properties flooding the market.
In previous years, it wasn’t uncommon for rental amounts to increase between 7% and 10% annually, and landlords automatically built such increases into their leases. Now, with lockdown and the ongoing pandemic, big changes have occurred in the way people rent.
“In previous years, it was not uncommon for rental rates to increase between 7% and 10% annually.”
Large numbers of tenants have been forced to either (1) move home to stay with the family or (2) move to a cheaper place to live.
Many renters have also started negotiations with existing landlords to keep prices the same or even lower them if they stay and extend their lease.
An oversupply keeps prices low
Due to economic pressures, more people are trying to rent than borrow money from the bank to buy a place and run the risk of a 25 year contract where they could lose their investment if they miss a month or two. Banks are also finding it difficult to give consumers the bonds they are looking for, as house prices are still a bit high from pre-pandemic levels and are only slowly falling.
“People who earn less are also looking for better prices”
People who earn less are also looking for better prices. Rental properties with excessively high prices are empty and this puts financial pressure on landlords who have financed the property through a bond. Every month the place is empty, you have to pay the bank yourself.
Lots of people have made up their minds to do so too share Accommodation (in many cases a larger house or apartment) to cut monthly rental costs by almost 50%.
Due to the sudden drop in tourists, many places where Airbnb operated on a short-term basis opted for long-term renters on-site. This also contributed to a sudden flood of rental spaces, which lowered prices.
Everyone has bad credit scores
Landlords also note that prospects all have limited credit reports (if they pressurize prospects into allowing them to produce such reports – which government is trying to stop).
These poor credit scores are confusing to landlords who would rely on this information to help select tenants beforehand. Now if everyone has a bad score, who do they choose?
What is the average
The national average rental price (across locations of all sizes and capacities and across all territories) is R7854.
This is only an increase of R10 over the previous year’s average.
If you are under financial pressure, talk to your landlord about a price freeze or even a price cut. If you don’t ask, you won’t get it.
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