It’s a tough economy out there but savvy tenants can negotiate a good rental deal.
Prices appear to be going up wherever you look, whether it be food, petrol, electricity or water. It seems the consumer just can’t escape a price hike. But the good news is that if you’re leaving the nest and are keen to rent a property, then market conditions are in your favour.
It’s not just certain cities or areas that are going through this cycle where it’s tenants and not landlords who are dictating terms. Price also comes into it.
“The South African rental market is in a cycle of slow growth but in the Western Cape, in particular, there still seems to be a demand compared to everywhere else. As soon as properties go above R12,000 a month there are fewer people interested. The ones below that tend to go more quickly,” says Rozanne van der Lugt, rental manager and owner, Van der Merwe & Robertson Properties.
So what are the reasons behind this slump in the market? According to property experts the factors are varied, but together they’ve created an environment where the tenant is in a great position.
Properties flooding the market
“For the last few years we have seen such a huge rise in rentals – people could literally name their price. And then we suddenly got a flood of developments in the Southern Suburbs and Sea Point, and they’ve flooded the market. So renters now have a greater selection to choose from, and the only way to go is to drop the price,” says Gail Cawood, letting manager of Knight Frank.
People are sharing
High rental and house prices have forced consumers to make other arrangements when it comes to accommodation. Some young adults have foregone flying out of the nest and have instead chosen to stay with their parents. Alternatively, people are sharing accommodation with friends and family and as this can be quite a comfortable arrangement, there is no longer the urgency to move out. This means there are fewer people shopping around for accommodation, which again puts the power in the tenant’s hands.
The Airbnb phenomenon
With property disruptor Airbnb entering the South African market, it suddenly gave anyone the ability to become a guest house/bed & breakfast owner. While this has created some entrepreneurs in the tourism industry, it has also increased the supply of rental accommodation. “There has been a huge uptake with Airbnb. So it’s flooded the market and while some people might be getting success in the summer, the rest of the time they are suffering so they are coming back onto the long-term market which means more stock for us and not enough people to rent,” explains Cawood.
Experts are unwilling to say how long this market, which is favouring the tenant, will last. But the choice is creating a stale, slow market where people are taking their time to make up their minds and are taking the opportunity to haggle and get a fairer deal. But you can only negotiate from a position of strength. If you have a poor payment and credit record, you’ll not be an ideal candidate for a landlord. In these tough economic times, landlords will want to deal with tenants who can demonstrate affordability and a good track record.
Tips for renters
Now that the market has turned there are lots of tactics that potential tenants can adopt to ensure they get a good price:
- Haggle: If you see that a property has been on the market for a long time you have the power to negotiate a good deal.
- Demonstrate your worth: If you have a good history of repaying your landlords, stellar references, a stable job and a good credit score you will be a very sought-after tenant. Landlords like to know that their home is secure and that they will get paid. State your price and highlight the fact that you are a good candidate and you’re bound to get the price you’re looking for.
- Be firm about increases in your rent: If your rent is up for renewal you shouldn’t just accept any increase that comes your way if your landlord allows you to stay on. “Our advice to current landlords is to stay put with the tenants that you have,” says van der Lugt. However, when it comes to renters they have the power to negotiate. “If your landlord is not willing to listen to you and rental increases are high then definitely take advantage of the current market,” says Cawood.
This article first appeared in City Press.