Major red flags for landlords in South Africa

The number of South Africans unable to pay rent is rising, and burdensome legal processes mean landlords have to sit and pay rates and taxes for property with tenants who live rent-free for months and, in some cases, years.

The ongoing economic challenges, including high unemployment rates and slow economic growth, have significantly strained household incomes.

Many tenants struggle to meet their rental obligations as wages stagnate and living costs soar.

Landlords also face higher maintenance and property management costs, which sometimes lead to rent hikes. Tenants find these hikes difficult to absorb, perpetuating the cycle of arrears.

However, while it’s the tenant’s responsibility to pay rent, it’s the landlords who are getting burnt.

Speaking to eNCA, attorney at Ulrich Roux and Associates Cameron Phillips said cases of tenants not paying are common in South Africa, and the law protects the tenants.

“With the current economic climate, we [South Africa] have seen this problem become more serious.

“So much so that the general magistrate’s courts across the country have begun to dedicate rolls to eviction proceedings,” he said.

Phillips explained that the main concern is the amendment made to the Constitution, which came into effect in 1996.

“Under Section 26 of the Constitution, there is a general right that protects persons from being evicted from their homes without an order from the courts.

“This effectively prohibits landlords from moving people from their properties without authority,” he said.

Phillips also noted that these protections afforded to tenants include a proper eviction procedure.

However, inefficiencies within the legal system and the multiple steps required in these procedures mean landlords have to wait a strenuous amount of time before something is done.

Phillips further mentioned that the rights afforded to landlords are limited to the right to receive rental, inspect the property, and cancel the lease as per the terms agreed upon—but the actual removal of the person is another step entirely.

This is a major blow to these landlords, who must continue to pay rates and taxes on the property and even a bond in some cases.

These issues were brought sharply into focus after the Sunday Times reported that a Durban businessman hadn’t paid rent for his R12 million Umhlanga apartment for two years, with the eviction proceedings still ongoing.

The businessman, claiming poverty, was ordered to leave a luxury penthouse by September 24. However, he’s appealing the ruling after a two-year legal battle with the landlord, Dr Blaine Bloy, who has spent about R700,000 trying to evict him.

The penthouse has stunning sea views and is located in the Herrwood Skye estate.

Despite not paying for rent, not paying for water and lights, and having illegally connected the electricity and water, the man has been granted another three months of unpaid accommodation following his appeal.

“I feel saddened that a court of law can be so biased against people who work hard to make ends meet. The magistrates [would] rather support an ‘unemployed’ person to hijack my property for more than two years,” said Bloy.

More landlords could soon find themselves in similar positions, as the latest PayProp Rental index for the first quarter of 2024 shows that the number of tenants who can’t afford their rent across the board has increased in South Africa.

After declining in the second half of last year, the report noted that the percentage of tenants in arrears leapt to 18.3% from 17% in Q1 2024—undoing almost all of the progress made last year.

This could be due to tenants overspending during the December holidays, but the increase in arrears is significantly larger than the one measured in Q1 2023.

It added that the increase could also be a sign that the same affordability pressures that are suppressing rent increases are also causing more tenants to miss payments.

The average arrears percentage also grew from 74.0% in Q4 2023 to 77.5% in Q1 2024.

The average arrears percentage, which expresses the average amount in arrears as a percentage of the average rent overall—an average arrears percentage of 80%, therefore, means that on average, a tenant in arrears owes 80% of one month’s rent in a particular province.

Read: The one province in South Africa where homeowners are taking a big hit in 2024