Research reveals true impact of COVID-19-induced recession on home rental market


A staggering 88% of tenants believe that they will only be able to afford monthly rentals that’s reduced by 10% for the next 12 months, while more than a third of tenants say they would move for a better deal.

These are some of the findings of a survey conducted by digital rental platform, HouseME, among more than 1000 of its tenants and landlords in June and July, which show the impact of the COVID-19 lockdown and economic slowdown on the residential property market in stark black and white.

The vast majority of landlords (85%) own bonded properties, so it’s unsurprising that 37% said they could not afford to self-fund more than one month of vacancy, with half of those landlords indicating that they could not fund even a single month of vacancy. However, despite the severity of the financial impact of the pandemic, 41% of landlords are expecting rentals to remain unchanged for the next 12 months and a surprising 24% expect rentals to increase.

With 28% of tenants already having had their income negatively affected, either through job loss or salary reduction and 21% concerned about income security in the next six months, this mismatch of expectations between landlords and tenants is likely to cause tension when it comes to property pricing and negotiation.

Says Ben Shaw, CEO of HouseME, “A major concern for all landlords, banks and property managers is what will happen when the payment holidays end. Landlords who have had the benefit of delaying home loan repayments may now be forced to ruthlessly pursue rental to cover their payments. Tenants who have had the benefit of rental payment holidays could now be within days of default. Consequently, we expect the national default rate to spike in August and September and this will have a knock-on effect on property value, credit records and general affordability by the consumer.”

This tension is already beginning to show, with a quarter of all landlords surveyed listing non-payment of rental as their biggest worry going forward, followed by vacancies (19%) and late payments (16%). In line with these concerns, HouseME’s rental guarantee was the product rated as most attractive in the current market conditions.

The economic recession is already biting hard among tenants, with some respondents saying that moving costs are prohibitive given their current liquidity position, and some even citing petrol and travel costs for viewings as a barrier. Supporting this is HouseME’s DepositFREE product, which has become a major drawcard for tenants as it frees up cash that would otherwise be tied up, and is becoming increasingly popular among landlords as leverage to attract applicants to their property. 68% of respondents said that access to video walk-throughs would reduce the need for in-person viewings, so may also pave the way for tenants to save whilst still looking for a new home.

Shaw says that that the pandemic has fast-tracked the move to digital, which is reflected in accelerated adoption of the HouseME platform. “We have seen an 80% jump in units advertised since the first quarter of the year; driven by larger property portfolios – all of whom are now moving digital, seeking the cost efficiencies of a long-term letting platform. Our listings climbed from an average of 400 pre-lockdown to more than 750 in July. This is partly due to the influx of fully-furnished holiday-let units now seeking long-term tenants because they can no longer rely on the short-term market for income. This increased supply is likely to further push down rental prices, particularly in major cities – both tourist and business centres – until tourism picks up again.”

Fast facts about the survey respondents:

  • Average ages: landlords 42 years, tenants 34 years.
  • 53% of properties owned by the landlords surveyed were in the Western Cape, 37% in Gauteng and 8% in KZN, while 66% of tenants surveyed reside in the Western Cape, 25% in Gauteng and 6% in KZN.
  • 59% of landlords earn between R20 000 and R70 000 per month (29% of whom earn R30 000 to R50 000), while 79% of tenants earn less than R30 000 per month (34% of whom are in the R20 000 to 30 000 income bracket).
  • There is a higher concentration of young, upwardly-mobile landlords (20 – 35) in Johannesburg than there are older landlords (35 – 55) or buy-to-let landlords.


Brandstories Disclaimer:

Brandstories is not liable for the contents of the information published on this platform. The information which subscribers publish on this website is for general information purposes only and Brandstories facilitates the ability for viewers and subscribers to access this platform. Subscribers who publish their content on Brandstories are held responsible for their own content. This includes ensuring that it is factually accurate, grammatically correct, free of spelling errors, and does not contain unsavoury content that could result in legal action. In the case of linguistic translations, the onus is on the client to ensure that the translation is accurate. In no event does Brandstories make representations or warranties of any kind, expressed or implied about the completeness, accuracy, reliability, suitability or availability with respect to the information supplied and published. This website includes links to other websites, including third party websites. Brandstories does not recommend, endorse or support any views that are held by subscribers publishing information, and within these links provided. Furthermore, Brandstories does not have control over the nature, contents and availability of information contained on these sites. Any form of reliance readers and consumers may place on information published on Brandstories is strictly at their own risk. Brandstories makes every effort to ensure that the website is up and running smoothly at all times, however Brandstories does not take responsibility for, and will not be held liable for times when the website is temporarily unavailable due to technical glitches that are beyond our control.

HouseME is a digital renting platform that uses technology to make renting easier and more affordable for landlords and tenants. We help landlords with finding tenants, credit checks, rent collection, guaranteed rent in case of late or non-payment, and access to maintenance providers. All for South Africa’s lowest rental management fees. Our online tools are available across the country, but in Cape Town and Johannesburg, additional services are available for landlords who would like help with photography, hosted viewings, inspections, and emergency maintenance. Tenants can book viewings online, submit their application digitally, and benefit from DepositFREE renting or flexible deposit plans. In short, HouseME is the new, easy and smart way to rent.