A majority of people still choose to rent than buy property for a variety of financial reasons including the flexibility of moving out.
According to TPN Credit Bureau’s survey of over 170,000 tenants, some people still do not want the commitment of owning property for many reasons. Despite finances being one of the main reasons people can’t afford to buy property, some people enjoy the flexibility of not being tied to one. Other reasons that put off people are poor credit record, debt, political uncertainty and emigrations.
“A significant 58% of respondents reveal that financial barriers are the reason they rent, with 48.1% reporting that they can’t afford to buy a property. This is not surprising given that consumers are faced with high interest rates, inflation and restricted employment opportunities. A poor credit record prevents 9.9% from purchasing a property, another financial barrier to becoming a homeowner.
“Overall, 17.2% want the flexibility to move and 0.8% are either in the process or planning to emigrate and would, therefore, rather rent than purchase a home. Mobility appears to remain an important consideration. Political uncertainty motivates 1.8% of respondents to rent rather than buy property,” read the report.
TPN’s third national residential tenant survey provides the property sector with insights into tenants’ needs, wants, aspirations and challenges to ultimately serve their core market more effectively.
Due to the high cost of debt, transfer costs and other expenses related to homeownership, 11.4% of renters are of the opinion that it is cheaper to rent rather than to own a property, while 2.2% do not want to incur the debt that home ownership would require, the report said.
Waldo Marcus, industry principal at TPN, said men are more preoccupied with SA’s political uncertainty, are considering or are in the process of emigrating and are struggling more with bad credit records – particularly those aged between 40 and 49 – than their female counterparts. They are also more inclined to believe renting is cheaper than buying property.
“Older respondents are more focused on avoiding debt and being concerned about political stability. Younger respondents, on the other hand, are less concerned about political and financial risk,” said Marcus.
More than a third of respondents (37.8%) said their ideal lease structure and terms included a lower rental escalation, with no deposit requirements, but were willing to commit for a longer lease period. This kind of lease structure benefits landlords, offers more security, fewer vacancies and a predictable income stream, said Marcus.
Interestingly, 42% of tenants don’t have a specific property type preference as long as the property addresses their feature preferences. Free-standing homes are the preferred option for 20.2% of tenants, followed by sectional title flats and townhouses (both 19%). Clusters in a complex elicited the lowest interest at 18.8%.
Women prefer sectional-titled flats, townhouses and clusters in a complex to a free-standing house while men prefer free-standing houses, followed by a cluster in a complex, and have the least preference for a sectional title flat or townhouse.
Tenants’ primary selection criteria for a rental property are price and security, followed by property size and space.
However, security is by far the most crucial feature of a property that tenants intend to purchase, followed by the size of the property, the quality of the suburb and proximity to work and school.
Property rates and taxes are one of the top six considerations for prospective buyers which, pointed out Marcus, underscores the high financial impact of rates and taxes on home ownership and the significant role they play in the decision-making process.
Surprisingly, paying rent is not the biggest challenge facing tenants but rather landlords not attending to repairs and maintenance of the property. Paying rent on time is their second biggest challenge, followed by access to parking and availability of parking and a lack of control over utility costs.
“The ability to manage utility costs more independently will help investors and managers not only to improve their assets’ attractiveness to prospective tenants but also mitigate one of the rental market’s top challenges,” Marcus said.
Why people prefer renting houses than buying
Poor credit record, debt, emigrations some of the causes
Image: 123RF
A majority of people still choose to rent than buy property for a variety of financial reasons including the flexibility of moving out.
According to TPN Credit Bureau’s survey of over 170,000 tenants, some people still do not want the commitment of owning property for many reasons. Despite finances being one of the main reasons people can’t afford to buy property, some people enjoy the flexibility of not being tied to one. Other reasons that put off people are poor credit record, debt, political uncertainty and emigrations.
“A significant 58% of respondents reveal that financial barriers are the reason they rent, with 48.1% reporting that they can’t afford to buy a property. This is not surprising given that consumers are faced with high interest rates, inflation and restricted employment opportunities. A poor credit record prevents 9.9% from purchasing a property, another financial barrier to becoming a homeowner.
“Overall, 17.2% want the flexibility to move and 0.8% are either in the process or planning to emigrate and would, therefore, rather rent than purchase a home. Mobility appears to remain an important consideration. Political uncertainty motivates 1.8% of respondents to rent rather than buy property,” read the report.
TPN’s third national residential tenant survey provides the property sector with insights into tenants’ needs, wants, aspirations and challenges to ultimately serve their core market more effectively.
Due to the high cost of debt, transfer costs and other expenses related to homeownership, 11.4% of renters are of the opinion that it is cheaper to rent rather than to own a property, while 2.2% do not want to incur the debt that home ownership would require, the report said.
Waldo Marcus, industry principal at TPN, said men are more preoccupied with SA’s political uncertainty, are considering or are in the process of emigrating and are struggling more with bad credit records – particularly those aged between 40 and 49 – than their female counterparts. They are also more inclined to believe renting is cheaper than buying property.
“Older respondents are more focused on avoiding debt and being concerned about political stability. Younger respondents, on the other hand, are less concerned about political and financial risk,” said Marcus.
More than a third of respondents (37.8%) said their ideal lease structure and terms included a lower rental escalation, with no deposit requirements, but were willing to commit for a longer lease period. This kind of lease structure benefits landlords, offers more security, fewer vacancies and a predictable income stream, said Marcus.
Interestingly, 42% of tenants don’t have a specific property type preference as long as the property addresses their feature preferences. Free-standing homes are the preferred option for 20.2% of tenants, followed by sectional title flats and townhouses (both 19%). Clusters in a complex elicited the lowest interest at 18.8%.
Women prefer sectional-titled flats, townhouses and clusters in a complex to a free-standing house while men prefer free-standing houses, followed by a cluster in a complex, and have the least preference for a sectional title flat or townhouse.
Tenants’ primary selection criteria for a rental property are price and security, followed by property size and space.
However, security is by far the most crucial feature of a property that tenants intend to purchase, followed by the size of the property, the quality of the suburb and proximity to work and school.
Property rates and taxes are one of the top six considerations for prospective buyers which, pointed out Marcus, underscores the high financial impact of rates and taxes on home ownership and the significant role they play in the decision-making process.
Surprisingly, paying rent is not the biggest challenge facing tenants but rather landlords not attending to repairs and maintenance of the property. Paying rent on time is their second biggest challenge, followed by access to parking and availability of parking and a lack of control over utility costs.
“The ability to manage utility costs more independently will help investors and managers not only to improve their assets’ attractiveness to prospective tenants but also mitigate one of the rental market’s top challenges,” Marcus said.
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