Paying late or never

There has been a significant drop in the number of rental tenants who are paying in full and on time, according to TPN, a registered credit bureau and developer of the industry's first rental payment profile of its kind in South Africa.

Figures for the third quarter from TPN's database show that 54 percent of tenants, compared with the previous figure of 70 percent, are able to meet their rental commitments. This is despite the fact that the rental industry has seen a recent average rental price drop of two percent.

Michelle Dickens, managing director of TPN, says the 16 percent drop in on-time and in-full payment clearly reflects the tightening economic conditions which have negatively impacted on tenants' ability to meet their rental obligations.

The latest figures from the National Credit Regulator (NCR) show that there are 17.14-million active credit consumers of whom 38.44 percent are in bad standing, TPN noted.

For consumers with impaired credit records, debt stress has reportedly increased 0.8 percent, only impacting the crisis further.

"Our data shows a marked increase in the number of tenants who paid late, pushing the national figure up to 20 percent. This is a five percent increase from the first quarter," said Dickens.

"A more worrying trend is the fact that 12 percent of tenants are not able to meet their rental commitments at all and are defaulting on their full rental payment — up from seven percent in both the first and second quarter of 2008," she noted.

"It is important to remember that affordability is not measured on earnings alone, but rather earnings less expenses. In these troubled times it is in the estate agent's and prospective tenant's best interest that affordability be accurately ascertained.

"This practice not only prevents the consumer or tenant from being blacklisted, but will also ensure protection for the landlords. Although the NCR does not require affordability assessments for potential tenants, the method is fast becoming a best of business practice among estate agents in South Africa," she said.

TPN has developed the only rental payment profile database of its kind in South Africa and has been profiling tenants for more than eight years.

Its database combines information from TPN and other sources to provide the most comprehensive behavioral profiles on tenants and prospective buyers in the property industry.

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