Warning for landlords in South Africa

As South Africa’s rental market enters its peak moving season, experts warned that automatic rent hikes could lead to vacancies and a loss of income. 

South Africa’s rental market traditionally enters one of its busiest periods at the start of the new year, with tenants moving for practical reasons. 

This includes relocating closer to their children’s schools, changing jobs, retiring, or moving nearer to family support networks.

“And for landlords, this seasonal churn is often seen as an opportunity to increase rentals,” said FIRZT Realty director Ephraim Zaslansky.

“However, current market conditions suggest that automatic rent hikes may not always be the most effective strategy.”

According to data from Payprop, the total amount of personal debt outstanding in South Africa is now worth over R2 trillion.

Tenants also spend an average of almost 48% of their net income on debt repayments, despite interest rate cuts in the past year.

“On average, rent costs them another 31% of their net income, so many tenants who are on the move at this time of year will be actively looking to reduce their monthly expenses,” Zaslansky said.

“They know that this year, like others, is bound to bring increases in school fees, insurance and medical aid premiums, electricity and water tariffs, taxes and other costs over which they have no control.” 

Unlike many other expenses, however, tenants are able to take action against rising housing costs, Zaslansky explained. 

“They are definitely prioritising affordability as well as location whenever they move now, so that they can accelerate debt repayment and improve their financial resilience,” he said.

“Many other tenants are also specifically looking to cut rental costs now so that they can save a deposit and purchase a home of their own.” 

At the same time, he noted, tenants in the main economic centres currently have more rental choices than they’ve had in years. 

In Johannesburg, in particular, the past six months have seen a surge in new residential developments near business hubs and transport corridors. This increased supply is placing pressure on older rental stock to remain competitive.

“In this environment, landlords who rely solely on rental increases to improve returns may find themselves facing longer vacancies, and a vacant property can quickly cost more than a modest or deferred increase,” Zaslansky said.

“For example, an inflation-related increase of 4% on a property currently renting for the national average of R9,300 a month might only bring in about R4,500 of extra income a year.”

However, Zaslansky warned that landlords could lose more than double that amount if the property remains vacant for just one month, as tenants may regard it as overpriced.

How landlords can boost demand and retention

Instead of blindly implementing automatic rental hikes, Zaslansky advised that landlords should focus on improving both demand and tenant retention by examining the overall value proposition of their properties. 

One practical way to do this is by ensuring that the property is well-maintained. Fresh paint, working appliances, secure doors and windows and well-kept common areas make a strong first impression and reduce objections during viewings.

Including or upgrading key features could also help boost demand and retention at rental properties, Zaslansky explained.  

High-speed fibre readiness, prepaid electricity and water meters, energy-efficient lighting and secure parking are increasingly seen as essentials rather than luxuries. 

“Excellent security is also non-negotiable, but landlords can increase the appeal of their properties by installing gas stoves, solar geysers or heat pumps to reduce electricity costs,” he said. 

“First-time renters also appreciate properties that come with additional appliances such as a fridge and a washing machine.”

Zaslansky added that offering flexibility, such as varied lease options and staggered escalation clauses, is attractive to tenants who are budgeting carefully.

Landlords should also bear in mind that rental prices vary greatly from province to province and even from area to area. 

That means that setting a competitive price that is in line with comparable properties in the same area is the key to quicker placement and more stable, long-term tenants.

Finally, Zaslansky urged landlords to seek expert help. Professional letting agents can help provide accurate rental pricing guidance.

They can also thoroughly screen tenants, reduce vacancy periods through proactive marketing, and ensure that all lease documentation is complete and legally compliant.

He added that landlords who take a broader approach and acknowledge tenant needs in terms of value, convenience and affordability are much more likely to achieve long-term success.