Survey Reveals: Financial hurdles named top reason for renting, shedding light on tenant perspectives

Most people who rent residential accommodation do so for financial reasons with nearly half admitting they can’t afford to buy a property, according to credit bureau TPN’s latest Tenant Survey.

The annual Tenant Survey Report provides the property sector, including property owners and managers, with insights into tenants' needs, wants, aspirations, and challenges, allowing them to enhance their property offerings and better understand future trends based on consumer inputs. More than 170,000 tenants were surveyed, and 19,000 completed responses were received, making the TPN Tenant Survey Report the largest holistic tenant survey in South Africa. Tenant responses were sorted by gender, age, location, and rental value band.

High interest rates, inflation and restricted employment opportunities are having a significant impact on the ability of many people to own their homes. Just short of 10% of respondents said a poor credit record prevented them from becoming a homeowner.

However, people don’t only rent because it’s all they can afford. More than 17% of respondents rent because they want to have the flexibility to move; 11.4% believe that it is cheaper to rent than to own a property; 2.2% don’t want to incur debt; 1.8% are motivated by political uncertainty and would, therefore, rather rent than purchase a home, and 0.8% are either in the process of or planning to emigrate.

Gender disparity in Renting: Women gravitate towards rentals amid financial constraints

Recent findings from a comprehensive survey unveil a significant gender gap in rental habits, elucidating the complex interplay of economic factors shaping housing decisions.

The survey reveals a pronounced divergence in rental expenditure between genders. Notably, women predominantly occupy lower rental value brackets, with 10.4% renting properties priced at R3,000 or less monthly. In contrast, only 0.4% of female tenants are found in the highest rental range of R25,000 or more. The majority of women, spanning 0.4% to 0.4%, are nestled in the R4,500 to R7,000 per month range. Conversely, men tend to gravitate towards higher rental bands, with 7.2% renting properties priced at R3,000 or less and a notable 33% occupying the R7,000 to R12,000 range. Merely 0.8% of men opt for accommodations priced at R25,000 or above monthly.

Financial constraints emerge as a driving force behind women's rental choices, with over half citing affordability as the primary deterrent to homeownership. This discrepancy, amounting to a 10.2% difference compared to men, underscores the disparate financial landscapes facing both genders.

Waldo Marcus, Industry Principal at TPN Credit Bureau, illuminates additional nuances, noting men's preoccupation with political uncertainty and credit challenges, particularly among those aged 40 to 49. Moreover, men exhibit a prevailing belief in the economic advantages of renting over property ownership.

Lower rental escalations, no deposit are the preferred lease structures

The survey delves deeper into lease preferences, revealing a notable inclination towards structures offering lower rental escalations and no deposit requirements. Over a third of respondents express a preference for extended lease periods coupled with reduced financial barriers, a trend beneficial for landlords seeking stability and minimized vacancies. However, Marcus cautions against potential impacts on returns and advocates for innovative solutions like deposit insurance to address tenants' financial constraints.

Flexibility emerges as a recurring theme, with nearly a third of respondents favouring month-to-month lease arrangements, a reflection of the economic, social, and political uncertainties pervading the rental landscape.

Despite preferences for flexibility, aspirations for homeownership persist, evidenced by the appeal of rent-to-own propositions among 26.7% of tenants. Marcus underscores the need for developers to explore innovative funding models to bridge the gap between renting and ownership aspirations.

Interestingly, tenant priorities extend beyond amenities, with price, security, and property size taking precedence in property selection. This insight underscores the imperative for developers and managers to prioritize affordability and security in their offerings.

Security a key consideration for those looking to buy property

Looking towards property ownership, security emerges as a paramount consideration for prospective buyers, followed by property size and location. Marcus emphasizes the financial implications of property rates and taxes, underscoring their significant role in the decision-making process.

Landlords failing to make repairs is the biggest challenge facing tenants

Notably, the survey identifies landlords' negligence in property maintenance as a chief concern for tenants, highlighting the importance of responsive property management in fostering tenant satisfaction and retention.