Tenant rental payment behaviour remained "stable" throughout 2010, with the breakdown of data in the fourth quarter of last year indicating a slight deterioration as the paid-on-time category declined by 2% to 66% and the paid-late category increased by the same margin to 15%.
The Eastern Cape and Western Cape led the pack in the number of tenants in good standing, scoring 87% and 84% respectively against the national average of 81%.
According to TPN, a registered credit bureau, there was no change in tenant behaviour in the partially-paid (9%) and did-not-pay (10%) categories.
TPN MD Michelle Dickens said there were a number of reasons contributing to the stabilisation of data, key among them being a low prime interest rate, limited available credit and relatively flat or low rental increases over the past two years.
A previous over-supply of investment properties, with their associated desperate investors, contributed to the pressure of low rental prices, as well as landlords recognising the advantage of extending leases with quality tenants at the same rental price, to ensure continued collection, she explained.
Another factor that influenced lower increases in rentals for 2010 was the fact that substantially higher electricity costs were borne by the tenant.
"Many landlords, as provided by most lease agreements, also enforced the collection of increased rates and taxes onto the tenant," she said.
Eastern Capeand Western Cape led the pack in the number of tenants in good standing, scoring 87% and 84% respectively against the national average of 81%.
However, a distinction in the further breakdown by province indicated that the Western Cape's paid-on-time category scored 72% and its paid-late category 12%, compared with the Eastern Cape's 68% and 19% respectively.
The two provinces' tenants in the did-not-pay category were significantly below the national average (10%) at 6% and 7% respectively.
Kwazulu-Nataland Gauteng remained the worst affected, with 13% of tenants in the did-not-pay category, although this was an improvement from previous quarters.
The 3,000 rand to 7,000 rand rent bracket remained the best performing, with an overall good standing of 84% (71% paid on time; 13% paid late). The 7,000 rand to 12,000 rand category averages were in line with the national average of 81% (64% paid on time; 17% paid late).
The bracket covering less than 3,000 rand showed signs of collection weakness at 77% (60% paid on time; 17% paid late). Also notable was that tenants in this bracket had the highest did-not-pay results at 13%.
The 12,000 rand-plus bracket further deteriorated quarter on quarter, with an overall good standing of 77% (50% paid on time; 27% paid late).
"Although 2010 was not without its challenges, conditions remained fairly stable, allowing investors to plan and manage their properties with more foresight. Sentiment in the industry from property managers indicates a shift in supply and demand as demand from tenants starts to outweigh property stock, especially in the low and affordable brackets, below 7,000 rand per month," Michelle said.
First National Bank reported that sales in the buy-to-let segment were at a low of 7% of total property buying, according to TPN.
"Investors are starting to look for rental increase, although it might still be some time before noteworthy increases are seen. This year will see further pressure on tenants due to higher electricity charges, travel costs and food price increases, which may lead to deterioration in rent collection," said Michelle.
"With the prime lending rate at its lowest in 29 years, TPN rental payment profile data confirms an inverse relationship between the interest rate and tenants in good standing, albeit with a nine-month lag period. Should interest rates remain unchanged or even increase, given the nine-month lag, this will hopefully result in only a marginal deterioration in rental collections for 2011." - I-NetBridge
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