Pretoria remains top choice for tenants.

tenant affordability also remains an issue, as the pandemic and lockdown restrictions significantly impacts the pockets of South Africans.

"Although most major provinces have seen an improvement in tenant payment behaviour above 80%, Gauteng lags with just 78.67% of tenants in good standing. Negative escalations in the province continued for the third consecutive quarter.

"However, if delinquent tenants and negative rental growth are risk indicators, then gross yield is the reward and in this respect, Gauteng takes top honours with gross yield at 11%.

The traditional sweet-spot segment are monthly rentals between R7 000 and R12 000. This segment continued to perform well in the second quarter of 2021 with the majority of tenants (86.32%) of tenants in good standing and close to 75% paying on time. Of concern, however, is the fact that affordability is acting as a key constraint in this segment while rental escalation remains in negative territory of -1.03%, says Dickens.

The traditional sweet-spot segment are monthly rentals between R7 000 and R12 000. This segment continued to perform well in the second quarter of 2021 with the majority of tenants (86.32%) of tenants in good standing and close to 75% paying on time. Of concern, however, is the fact that affordability is acting as a key constraint in this segment while rental escalation remains in negative territory of -1.03%, says Dickens.

Pretoria, seat of the executive branch of government, host to all foreign embassies in the country and home to a prosperous economy, remains a busy property market and while the rental sector has faced Covid-induced financial challenges, it is performing well - with high demand in the traditional sweet-spot segment.

Property owners are accepting low to no rent increases to keep good tenants, according to PG van der Linde, rentals manager for Seeff Pretoria East.

The area remains a top choice for tenants for a variety of reasons including the high prevalence of security complexes and estates, schools and amenities he says, with high demand in the affordable price band of R7 500 to R15 000 per month and ranging to about R25 000.

Properties which offer better value are always favoured by tenants. He says it remains paramount for property owners to get a rental valuation that is accurate to current market conditions to avoid the risk of vacancy and potential financial losses.

Competitive rental pricing

Competitive pricing remains important to counter the low interest rates and oversupply of rental properties. For this reason, he says rental escalation rates have been zero to negative to mitigate vacant properties by retaining good paying tenants.

When comparing bond payments for Pretoria, the average asking price for the area is about R1.4 million, according to property24 Trends Data. This would see an average monthly bond payment at 7% interest of R10 854 - click here to use Property24 affordability calculators.

The average sale price per erf for 2020 was about R950 000, with a current bond payment being R7 365 per month. The price for the sectional title schemes units for the same period is about R850 000 and a current bond payment of R6 590.

Using a reputable agency that will not skimp on credit checks for the sake of placing a tenant is also important. A vacant property is not ideal, but a tenant who cannot afford the rental or does not pay, is far worse, says Van der Linde.

"Although sectional title property is affected by high levies which impacts the yield that property owners can expect, these remain in high demand which means a lower vacancy rate and often, a more consistent yield in the long run.

Tiaan Pretorius, manager for Seeff Centurion says property owners have had to adjust to the price sensitivity in the current market. Most existing rentals did not increase, and where there is an increase, it is generally kept below the CPI rate.

Rental yields have stayed the same offering fair value for existing landlords. For new buy-to-rent investors, there are still opportunities in the market which offer potential for future returns on their investment.

There is always a strong demand for sectional titles in well-managed complexes and free-standing homes in secure estates. Most in demand are two-bed units in the R7 000 to R8 500 per month range and R9 000 to R10 000 for three-bedroomed units.

Security estates are currently attracting tenants predominantly in the R15 000 to R20 000 range and luxury homes in the R20 000 to R25 000 range.

New developments especially in the lower points in the rental market are going to dictate what is going to be the new market-related rentals landlords would be able to charge.