Traditionally, low interest rates accelerate rental market growth, and with it comes a flurry of new renters, particularly younger tenants who opt to share properties, as well as young professionals seeking what many are now referring to as the 'tenant experience'. Basically, this translates into an approach that is the sum of every aspect that impacts property occupants and the overall way in which tenants interact with the rental property.
Concept of 'tenant experience'
One might be forgiven for thinking that the 'tenant experience' is not an entirely new concept because, ultimately, what a landlord presents in a rental arrangement is a specific package that a potential renter accepts or does not accept. According to Jacqui Savage, National Rentals Manager of the Rawson Property Group, South Africa is yet to see serious momentum of the tenant experience trend currently rocketing in the US.
“Locally, tenants move into the property as is, if it fits their needs. Landlords very seldom do anything extra for the tenants in advance unless maintenance is required."
Yet, the tenant experience is something that will ultimately have to be factored into the SA rental market because it responds directly to shifts that have manifested through new technology introductions; the pandemic; and the higher interest rate cycle that has seen many new buyers reconsider their affordability to purchase, opting instead to rent until the market balances.
“The rental industry’s focus has, however, as a result of these factors, extended to proactively create more affordable rental opportunities, such as cost-saving improvements to existing properties,” says Savage.
"I think we are going to see more developers focusing on the 'affordable' rental housing space but tapping into the currently more prevalent trends of co-living and mixed-use properties. In my opinion, and relative to the tenant experience, forward-thinking landlords will likely be leveraging things like energy- and water-saving improvements to reduce costs for tenants, which addresses affordable rentals without the need to sacrifice rental income.”
Samuel Seeff, chairman of the Seeff Property Group, concurs with Savage adding that given the growing energy and water challenges, some sustainability, in this regard, will increasingly become part of the tenant experience. "Overall, however, it remains that tenants continue to look for properties that are well-maintained and a landlord who respects their privacy and attends, particularly, to maintenance issues when needed.
What property practitioners and landlords should consider
“What is evident is that it has become more important to facilitate a good tenant experience that addresses some of our local challenges. Security, for example, a low-maintenance garden, decent and up-to-date finishes, fibre-internet connectivity, and access to local amenities,” says Seeff. “Consider that these features are being offered in new developments, including air-conditioning and load shedding solutions. Overall, I think landlords are starting to realise the importance of looking after their ‘good’ tenants, to maintain their asset and income stream.”
Seeff also confirms what TPN is telling us, which is that there is an increase in rentals in the R3000-R7000 category, representing 53,5% of the rental market (TPN Credit Bureau). Those paying between R7000 and R12 000 comprise 23,5%, and above R12 000, just 8,5%. “It’s important for landlords to consider these percentages when they address the tenant experience. Generally, the higher-priced properties tend to attract fewer potential tenants, and even then, that demographic tends to be somewhat particular about the property and its add-on features.”
Regardless, all tenants expect more from their rental agent, especially if they are caring well for the property. Such would be ensuring promises made are kept, and repairs are effected timeously. This goes a long way to ensuring a mutually beneficial relationship between tenant and landlord and elevates the tenant experience, "even if we don't call it that here in SA," says Myles Wakefield, CEO of Wakefields Real Estate.
“I would say, however, that we are conscious of an increased sensitivity to the tenant experience, particularly in the competitive market that prevails. The better tenant experience attracts good tenants, who should not be labelled and treated simply as tenants but rather as individuals, professionals, and families who want a home as opposed to just a place to live.
“These are people who are usually happy to pay a premium for a well-run environment, a good-looking landscape, effective security, solar/inverters to mitigate load shedding, fast fibre and strong WiFi signals, swimming pools, play facilities for children, natural spaces for dog walking or bike riding, and easily accessible facilities that cater for active and passive lifestyles.”
Where facilities such as those mentioned by Wakefield do not exist, he recommends that prospective tenants could consider a request to the landlord. “If they are reasonable requests, the landlord may well accommodate those. However, costly items such as floor replacement or installing air-conditioners could see the landlord negotiate a longer lease and/or raise the rent accordingly; in other words, amortising those costs over the duration of the lease.
“I also recommend that a landlord puts himself in the tenant's shoes by paying attention to even small details such as LED lights and prepaid meters. These are things that tenants care about," says Wakefield. “It is often the case that tenants will pay a little extra when they perceive a landlord to be approachable, empathetic, responsive, and/or has installed appliances or gadgets to make the tenant experience more enjoyable.”
**Writer: Kerry Dimmer
