The percentage of tenants in arrears has fallen to a record low despite ongoing cost-of-living pressure, reveals the upcoming PayProp Rental Index for Q3 2023 – due out within weeks.
The Rental Index, which calculates arrears using real rent payment data, found that 17.5% of tenants were behind on their rent in Q3 – the lowest level recorded since PayProp began tracking arrears data in 2020.
The fall reversed a trend that briefly emerged earlier in the year. In Q4 2022, the percentage of tenants in arrears stood at 17.9%, but then rose to 18.0% and 18.4% in the first two quarters of 2023. At the time, PayProp advised property practitioners to stay vigilant ensuring continued rental payment, and it appears that they have done so.
On average, tenants in arrears had 74% of the monthly rent outstanding, down from 77.1% in the previous quarter.
Provincial arrears movements
The trend of falling arrears was observed in eight of the nine provinces, with only Limpopo seeing a rise from 18.9% to 19.6% of tenants. Meanwhile, the Free State, Northern Cape and North West all recorded large reductions in the share of tenants in arrears.
Limpopo was also a regrettable outlier as concerns the average amount owed by tenants in arrears – flat at 78.4% of the monthly rent. It wasn’t the worst performer in this metric, though: in KwaZulu-Natal, the average amount owed rose from 75.0% to 76.4% of the average monthly rent.
One note about interpreting the data: The PRI draws exclusively on data from PayProp-powered rental agencies, which have best-in-class arrears management tools at their disposal, and this may result in lower-than-average arrears figures. As such, trends are more insightful than actual percentages.
PayProp users can track tenants’ payment status in real time from their dashboards, send automated payment reminders via SMS and e-mail in a couple of clicks, and even send Letters of Demand from within the platform. PayProp’s automated reminders result in 90% of tenants paying some or all of their arrears within seven days.
The PayProp Rental Index is the most comprehensive analysis of South Africa’s residential rental market. Subscribe now to get your copy the moment it comes out.