Landlords - Be Careful

Private Property South Africa
Francois Venter

The latest Rental Payment Monitor from the Tenant Profile Network reports that 32% of tenants pay their rent late.

The first quarter of 2012 saw only 68% of tenants pay their rent promptly, while 8% of tenants made a partial payment, 13% paid late and 11% did not pay at all.

According to the Report, in the under R3000 per month rental bracket just 58% of tenants are paying on time, with 72% of tenants paying on time in the R3000 –R7000 per month rental bracket. In the R7000- R12 000 per month rental bracket, 71% of tenants are paying on time, while in the R12 000 plus per month rental bracket only 61% pay their rent on time.

In today’s economy people are struggling to pay their bills and many may incur a black mark against their names. Impaired credit records are common, with 46.2% of consumers considered to have such records. Francois Venter, a Director of Jawitz Properties advises landlords to protect themselves by thoroughly considering the financial background of prospective tenants.

“A full credit check gives insight into how tenants manage their financial affairs, and a reference check with their previous landlord helps you find out if they paid their rent on time and kept the property in good condition,” he says. Venter further advises that it is also essential to get employment confirmation and an income check from a prospective tenant’s current employer. “A general rule is that the rental amount should be no more than 30% of the tenant’s gross income.”

In the event that prospective tenants are employed on a contract basis, the lease agreement must be aligned to the employment contract. For self-employed individuals and companies, it is vital to obtain audited financial statements from a registered accountant. He further strongly advises that landlords re-check their tenants credit records, employment status and proof of income each year when their leases are renewed, as people’s financial positions can change rapidly in the current market.

Some tenants with an unfavourable financial history have been known to try to cover their tracks. The Rental Payment Monitor reports that more and more such tenants are targeting private landlords and submitting fraudulent applications in the form of falsified identity documents, or false proof of payment among other scams such as applying for a residence in another family member’s name, or submitting altered utilities bills.

If a tenant’s credit check comes up with any questionable results, Venter advises that a larger deposit or more than the first month’s rent be taken upfront, or perhaps agree on a shorter lease period. Landlords can also opt to use a rental agency which, as part of their service, will do thorough background checks before a tenant signs a lease or moves in.

Venter does, however, advise that landlords be realistic and anticipate that tenants with perfect records are hard to find. “With the help of a good rental agency, it’s possible to manage these risks which will not only benefit a landlord financially in the long run, but also deliver some peace of mind.”

For advice on Lanlord/Tenant issues, visit Private Property's Advice Centre.

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