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The Covid-19 pandemic has harmed many tenants financially due to the loss of income. While most employees have returned to work after the initial lockdown period, the aftereffects will be felt for much longer.

Johette Smutts, Head of Data and Analytics at PayProp says that they have witnessed many tenants approaching their agencies for financial assistance since the commencement of lockdown. Working together with their agents and landlords, many tenants have managed to reduce or to postpone their rent obligations or, to use a damage deposit to recover the rent.

The important thing to remember is that the tenants’ obligations have merely been postponed in such cases, and these rental obligations will still have to be met in future,” cautions Smuts.

Essentially, tenants will have to pay more money later and possibly monthly to cover their current and deferred rent or, to top-up a damage deposit. They will have less disposable income for other priorities, and they might even need to resort to loans or other financial assistance to cover their cost of living.

It’s not an ideal situation to land yourself in,” says Smuts, and while rent arrears won’t directly affect your credit score, a bad rental payment record is often visible to estate agents thereby affecting your changes of securing your next rental property.

Smuts advises that you keep a written record of all arrangements made with your agency or landlord and that these are correctly invoiced by checking your statement each month.

Being in good standing with rental payments may also increase your chances of negotiating a lower rental increase when it is time to extend your current lease agreement because in a tough market, it is harder than  usual to find reliable tenants. Finding the money now could ultimately save you money in the long run.

PayProp’s credit bureau partner, Experian, has observed a worsening in payment performance at the end of March, the very beginning of lockdown. Dieter Winkler, scoring analyst at Experian says that many of the account holders who were previously willing and able to pay may now only be willing to pay because of the effect of Covid-19.

The best they can do in terms of credit score health is to make the necessary arrangements with their credit providers; these arrangements most likely involve payment holidays and the deferral of payments.”

Tenants should think twice before taking out short-term loans at high interest rates as this type of credit may hurt their credit scores. Applying for credit repeatedly in a short time period could adversely affect a tenant’s credit record – correlations that are also evident in PayProp’s historic data.

Perhaps the best advice of all, now more than ever, is to draw up a realistic budget and stick with it,” says Smuts. “Cut all unnecessary expenses as far as possible and live within your means until your financial situation improves.”


GBSA