How to win the battle for quality tenants

Rising interest rates have significantly boosted the demand for rental accommodation over the past 18 months, and this has been reflected in sharply declining vacancy rates and some upward pressure on rentals.
 
However, says Andrew Schaefer, MD of leading property management company Trafalgar, landlords should not count on these trends escalating or even continuing in the current economic climate. “The majority of tenants are under considerable financial pressure due to high inflation and rising interest rates and on top of that, loadshedding and low economic growth is creating a higher risk of unemployment.
 
“Consequently, the rental market is increasingly competitive, and the risk of rental defaults is actually rising, so landlords need to be wary of unilaterally implementing rental increases now that might easily prompt existing tenants to leave or put new tenants off. They should rather focus on attracting and retaining quality tenants by doing whatever they can to increase the desirability of their rental properties and ensure that they provide good value for money.”
 
Get better tenants by improving your property
 
He says landlords could for example decide to provide or improve some of the features that tenants value the most. “Currently, this might include installing a gas stove so that loadshedding does not necessarily interrupt meal preparation, or installing an inverter and battery system to power fridges, computers and other essential items during blackouts.
 
“In freehold properties, a solar power system or at least a solar geyser is a draw card, and even in Sectional Title homes, it is possible increase the appeal by providing eco-friendly items that are increasingly sought-after, such as LED light bulbs, water-efficient taps and showers and sustainable flooring.
 
“Good security is also a priority for most tenants, so it is worth taking steps to improve the security and safety of the property, especially if it is not located in an access-controlled complex or estate. Secure locks, burglar guards and good outdoor lighting are essential, and landlords should consider adding electric fencing, security cameras and an alarm system if at all possible.”
 
Schaefer says other ways to make tenants feel that they are getting great value for their rent include the following:

*Good maintenance and prompt repairs. “It is vital to ensure that the grounds and exterior of the property always look well-maintained and inviting, and that the interior is clean, well-lit and visually appealing. Tenants also really appreciate quick and positive responses to requests for essential repairs.”
 
*Wrapping the cost of certain amenities into the rent, such as high-speed internet, laundry facilities, secure parking and additional storage space, or even a certain amount of pre-paid electricity.
 
*Maintaining good communication and giving good customer service. “This creates a positive landlord-tenant relationship and a sense of satisfaction and loyalty that encourages tenants to stay put and renew their leases,” he says. “And it is always preferable to retain a quality client who looks after the property and pays the rent on time, even if you have to settle for a lower increase when renewing.”
 
*Lease flexibility and incentives. In some areas, landlords may find that shorter lease terms are attractive to certain tenants, such as those on six to eight-month work contracts, and that they are prepared to pay a premium rental rate for this convenience. On the other hand, landlords may want to consider incentives for great long-term tenants who renew, such as a smaller rental increase, or an increase only once every two years.
 
But before making any changes, Schaefer says, landlords should engage a qualified and experienced rental agent to advise them about current rentals in the area and what “extras” tenants are looking for, and to ensure that all potential tenants are properly screened.
 
“Finding new tenants who are reliable is increasingly difficult because of the financial problems that many people are experiencing, so it is really important to be sure that anyone who is moving into your rental property is not only creditworthy and employed, but also has a good rental payment record.
 
“In addition, a good rental agent will help you to manage the maintenance of your property and any necessary repairs and contribute to the development of a sound and lasting relationship with your tenants.”