The majority of people who rent housing do so for financial reasons, with nearly half admitting they can’t afford to buy a property, while nearly 10% say a poor credit record prevents them from becoming homeowners, according to the latest National Tenant Survey by the credit bureau TPN.
The annual report provides the property sector with insights into tenants’ needs, wants, aspirations, and challenges, allowing them to enhance property offerings and better understand future trends based on consumer inputs. More than 19 000 completed responses were received from tenants for the survey.
High interest rates, inflation and restricted employment opportunities had a big impact on the ability of many people to own homes. Just short of 10% of the respondents said a poor credit record prevented them from becoming homeowners.
However, more than 17% rented because they wanted the flexibility to move; 11.4% believed it was cheaper to rent than to own property; 2.2% didn’t want to incur debt; 1.8% were motivated by political uncertainty and would rather rent than buy a home, and 0.8% were either in the process of, or planning to emigrate.
More women than men rented because they couldn’t afford to own a home. The survey found that women tended to rent in lower rental value bands compared with men, with 10.4% of female tenants renting for R3 000 or less per month, and only 0.4% paying R25 000 or more per month for rental accommodation.
Most of the women respondents paid between R4 500 and R7 000 a month. Men tended to rent in higher value bands with 7.2% paying R3 000 or less a month. Most men rent between R4 500 and R7 000 per month, with a third renting in the R7 000 to R12 000 rental bands. Only 0.8% of men paid R25 000 or more a month.
More than half of female respondents said they were renting as they could not afford to buy a property. This was 10.2% more than men, who were grappling with different concerns.
TPN Credit Bureau Industry Principle Waldo Marcus said the survey showed men were more preoccupied with political uncertainty, were considering or were in the process of emigrating and were struggling more with bad credit records – particularly those aged between 40 and 49 – than their female counterparts.
They were also more inclined to believe renting was cheaper than buying property.
“Older respondents are more focused on avoiding debt and being concerned about political stability. Younger respondents, on the other hand, are less concerned about political and financial risk,” said Marcus.
Lower rental escalations and no deposit were the preferred lease structures. More than a third of respondents said their ideal lease structure and terms included a lower rental escalation, with no deposit, but they were willing to commit to a longer lease period.
This kind of lease structure benefits landlords, said Marcus, offering more security, fewer vacancies and a predictable income stream.
“While deposits offer investors and managers some security, they are a barrier for tenants and prospective tenants, especially in the lower rental value bands. Alternative solutions like deposit insurance is a relatively new trend that has appeared in recent years to help tenants and landlords to manage, collect, and provide security deposits,” said Marcus.
Slightly less than a third of respondents preferred the more flexible option of a month-to-month lease, highlighting the need for flexibility, which was primarily fuelled by economic, social, and political uncertainty.
The rent-to-own proposition appealed to 26,7% of tenants, which said Marcus, indicated that many people continued to aspire to property ownership.
Free-standing homes were the preferred option for 20.2% of tenants, followed by sectional title flats and townhouses (both 19%). Clusters in a complex elicited the lowest interest at 18.8%.
Women prefer sectional-titled flats, townhouses, and clusters in a complex to a free-standing house, while men prefer free-standing houses, followed by a cluster in a complex, and had the least preference for a sectional title flat or townhouse.
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