FNB urges property agents and landlords to be mindful of tenants’ ability to pay rent

• BY ERASMUS SHALIHAXWE

First National Bank (FNB) MarketResearch Manager, Frans Uusiku, has urged real estate agents and landlords to be mindful of the negative effects of the current macro-economic environment on tenants’ ability to pay their rent.

Uusiku made the call on Wednesday while highlighting the bank’s rental performance for the past 12 months.

He said although the rental marked has recovered somewhat between the second half of 2021 and the first quarter of 2022, property agents and landlords should be mindful if tenants are able to continue paying their rents.

Uusiku noted the continued financial hardships faced by consumers might force them to seek much cheaper accommodation.

“The continued financial hurdles faced by consumers could force households to downscale their lifestyles by seeking out cheaper accommodation options, which would further derail a complete rental market recovery.

’On the flipside, rising interest rates and the subsequent reduced appetite to borrow may also mean that some higher-income tenants may decide to keep renting instead of buying properties for themselves which will have the opposite effect,” Uusiku said.

He added that it is becoming increasingly more expensive to maintain a home compared to a year ago due to higher cost of building materials such as steel and other essential household amenities.

“The rising interest rates are also lifting bond instalments, yet it is difficult for landlords to pass on sharp cost increases to tenants in the current difficult economic environment.

“Looking ahead, we expect nominal rentals to continue to rise slowly in the next year or so but at a rate lower than the consumer inflation rate,” Uusiku stated.