COVID-19 & Rent: What the lock-down means for landlords and tenants

The COVID-19 pandemic has brought unprecedented challenges to South Africa's property sector, one of the hardest-hit industries in the country. With lockdown regulations in place, consumers are grappling with unemployment and financial strain, causing a significant impact on the housing market. Declining prices and sales volumes are some of the key issues faced by landlords and tenants in this uncertain time. To shed light on the current situation and possible solutions, CNBC Africa hosted a panel of experts including Steve Brooks, the CEO of Bourbon Properties, Carl van den Berg, Business Development Executive at Private Property, and Michelle Dickens, the Managing Director and Founder of Tenant Profile Network. Dickens shared some alarming figures from their data analysis, revealing that the percentage of tenants not paying rent has increased from 6% in 2019 to 16% in the first quarter of this year. This significant jump underscores the financial difficulties faced by tenants amidst the ongoing crisis. While the paid-on-time rates have seen a slight decline, tenants who can afford to pay are still doing so. However, the challenge lies in reducing the number of tenants in the 'did not pay' category back to the usual 6%. Brooks, on the other hand, emphasized the importance of providing housing solutions, particularly in giving people title deeds. He highlighted the positive impact of the government's measures, such as interest rate cuts, in making property ownership more accessible for those still earning salaries. By offering innovative solutions like the green mortgage and subprime lending rates, Brooks aims to assist individuals in acquiring homes and title deeds. Van den Berg discussed the resilience of the property market, especially for first-time home buyers and investment buyers in the sub-million rand range. Despite the slowdown, he remains optimistic about the market's recovery post-lockdown. Additionally, Dickens proposed a short-term solution to address the immediate liquidity needs of tenants who have lost income. Through the 'rental recovery pack', tenants in good standing can utilize their deposit to cover their rent for the month, providing temporary relief until they resume employment. Looking ahead, the panelists emphasized the need for collaboration between landlords, tenants, and municipalities to navigate the challenges posed by the pandemic. While tax relief may not be a feasible option for municipalities, streamlining approval processes and facilitating property construction could significantly support the industry's recovery. By working together and exploring innovative solutions, the property sector in South Africa aims to weather the storm and emerge stronger in the post-pandemic landscape.