Search
Close this search box.

Biggest challenges landlords face and how to deal with them

MAIN IMAGE: Debbie Schmidt, Rental Portfolio Manager at Just Property Centurion; Noma Mtetwa, Portfolio Manager at Just Property Midrand; Yolandi Troskie, Portfolio Manager at Just Property Pretoria Old East and Lynnwood

The biggest challenges faced by landlords / managing agents right now are finding quality tenants and managing the remaining tenant arrears. Just Property franchisees offer landlords tips on how to find the best tenants, how to retain them, and what processes to follow when tenants fall behind in their payments.

According to the PayProp Rental Index 2022 Q2, the percentage of tenants in arrears is still lower than it was in 2020 (with a high of 24.9%) but has increased marginally from 18.4% to 18.5% in the last quarter. And the national vacancy rate has had a sharp decline from 13.31% to 8.26% (TPN Vacancy Survey 2022 Q1), however, this is still above the pre-pandemic low of 7.47% achieved in Q1 2022.

First National Bank, in the July 2022 Property Barometer announced that while still below aggregate core inflation, it expects rental inflation to “lift to over 2.0% on average in 2022, from 0.9% last year”.

Find best tenants

“We meet regularly with our agents to ensure they are marketing the properties to their best ability and to assist where we can,” says Debbie Schmidt, Rental Portfolio Manager at Just Property Centurion. “During the marketing phase, we encourage them to be transparent with the owner in their regular (preferably weekly) correspondence and to offer price counselling, maintenance feedback or requirements as needed.

“This is so important. The owners deserve to achieve a fair, market-related price for their property but sometimes are not aware of what that is,” says Gary Dickinson, Rental Agent at Just Property Margate. “We then advertise on all property portals – Just Property National Website, Property 24, Private Property, Gumtree, Facebook, and even local Whatsapp Groups. Make sure the pictures of the property are current and reflect what it really looks like.”

“Once tenant applications are in,” Schmidt continues, “we follow our parameters for vetting them, but we also take the time to consider all information provided and assist the tenant where possible.”

“These parameters ensure we adhere to FICA requirements and follow necessary procedures so that we know who we are dealing with,” explains Noma Mtetwa, Portfolio Manager at Just Property Midrand. “We back this up by getting references from previous landlords or agents and verifying employment. Finally, a thorough financial vetting process enables us to establish the tenant’s affordability.”

Brigitte Jacobs, franchisee of Just Property Vaal Triangle, explains that these vetting parameters include checking TPN reports and bank statements carefully to ensure the rental does not exceed 35% of net income.”

Yolandi Troskie, the portfolio Manager at Just Property Pretoria Old East and Lynnwood, says it’s a good idea to ask applicants to send their application forms before we arrange for viewings. “It’s often best to do the credit check first, and then viewing to see if the tenant will be able to pay their rent on time and in full every single month.”

“Checking the applicant’s ITC report is also very helpful with regard to how a tenant conducts their financial issues – one needs to know what other expenses they incur monthly,” adds Dickinson. “It is also a clever idea to ask questions like: Why are you looking for new accommodation? Is it relocating, downsizing, upsizing, conflict with a landlord, i.e., landlord not conducting maintenance, affordability? These are some questions that give you a general idea of the applicant.”

Good tenants?

“Be empathetic and understanding towards their needs, within the terms of the Lease Agreement,” says Schmidt. “Engage with the owner on necessary maintenance. Follow through from start to finish to ensure tenant satisfaction. We also try to limit any rent increase to be reasonable.”

Keeping up with the maintenance of the property and being responsive to requests and queries from good tenants is imperative. By doing so, tenants will feel cared for if property owners ensure the upkeep of a property and will then be inclined to hold up their end of the bargain.

Troskie agrees. “A low – or even the occasional 0% – increase is a terrific way to reward a good tenant, and when they have an issue make sure you deal with it as soon as possible. If it is not for my department, I will still follow up with the tenant to check that we have been in contact and the issue was sorted out or is scheduled to be addressed soon.”

Arrears

“It’s essential to follow the required legal process, which starts with issuing a letter of demand,” Mtetwa advises. “Where a payment arrangement is agreed to, we ensure that an Acknowledgement of Debt is signed. Should there be no remedy, we will cancel the lease agreement and give the tenant notice to vacate where necessary. Unfortunately, tenants who do not remedy the breach will be blacklisted.”

Schmidt agrees: “Even though a sympathetic ear is sometimes required, the landlord is our client, and we have to give them the best service possible. When a good tenant defaults for the first time, we always try to assist by setting up a payment arrangement with the landlord on their behalf. This allows them the opportunity to correct their breach of contract. But with tenants who default regularly, we are extremely strict with the rental collection. Rent can add up quickly, and we must act swiftly.”

Manage rental administration

Property management can be admin heavy. An easy to keep track of all tenant records is to use software systems such as RedRabbit and PayProp. RedRabbit is an intelligent inspection and maintenance management software that makes landlords’ lives easier, and PayProp is a platform that automates rental payments. Having access to these systems allows for rental processes to be managed seamlessly and for clear audit trails.

Share this article:

more top news stories

The market needs a rate cut, says BetterBond Property Brief

The market needs a rate cut, says BetterBond Property Brief

Following a national election outcome that has been well received, the new government of national unity (GNU) is committed to preserving the country’s constitution and maintaining the principle of private property rights. In the July BetterBond Property Brief, the focus returns to the repo rate.