South Africans typically look at area pricing and facilities when renting a property – but most prospective tenants will have to settle for the best compromise between that list and their budget.
“It’s all very well to live in an upmarket building with great security in a sought-after location, and have all the space and views you wanted, but if the rent is so high that you have to live on two-minute noodles and scrimp and scrape to pay your other bills, that is hardly an idyllic lifestyle,” said Greg Harris, CEO of Chas Everitt Property Rentals.
It is generally accepted, he said, that rent should equal no more than 30% of a tenant’s take-home pay – that is, their salary after tax and other deductions – so that they can also cover all their other monthly expenses such as transport, food, electricity and water, car and other debt repayments, school fees and cell phone costs without financial stress, and hopefully even be able to save something for emergencies or retirement.
“So according to the BankservAfrica Disposable Salaries Index (BDSI), which shows that the average disposable salary in July was R14,154 (compared to R13,894 in June), the average earner planning to rent an apartment should be budgeting no more than around R4,250 per month.”
This correlates with the latest PayProp Rental Index (Q2 2017), he said, which shows that although the national average rental currently being paid is just over R7,000, more than 35% of all tenants across the country actually do rent for less than R5,000 a month, with the next biggest percentage (31,75%) renting for between R5,000 and R7,500 a month.
“One must also remember that in KwaZulu-Natal, Gauteng and the Western Cape, the three most economically active provinces, the average salaries tend to be higher, enabling tenants to pay higher rents without necessarily breaching the 30% of disposable income ‘limit’.
“The average rentals in these regions are R7,194 a month, R7,482 a month and R8,231 a month respectively,” Harris said.
“South African tenants seem to be pretty good at sticking to the limit, as the PayProp statistics also show that male tenants currently spend an average of 23,8% of their net income on rent, while female tenants spend an average of 27,7%, owing to the fact that their salaries are generally lower.”