Rental Market Update: We’re in the 2nd ‘Tenanting Squatting Wave’!

Tenant Squatting Index - Second Wave

The TPN ‘Squatting Index’ is an indication of the number of tenants that haven’t paid any rental for four or more consecutive months – and it’s showing a very worrying increase!

Source: TPN

We’re in our 2nd Tenant Squatting Wave

After peaking during the hard lockdown in 2020, it then fell to a low of just over 0.8% by the end of 2020.

However, that low didn’t last very long and it has been growing steadily in 2020, with the latest available data reflecting a ‘third wave high’ of 1.2% in May 2021.

Has it peaked? We don’t know yet, we’ll have to wait for more data – Unfortunately, like all stats, we can only look at data ‘after the fact’.

What are the reasons for this new ‘wave’?

Many people believe it’s because evictions are not permitted under the current State of Disaster Regulations, but that is simply not true – it may have been true under hard lockdown, but that blanket prohibition of evictions ended a long time ago.

Courts are granting eviction orders!

Courts are certainly granting eviction orders, but there are a few differences, the following being the most important that are affecting the ‘squatting index’ . . .

  • Getting a court date is taking longer, and
  • Courts are generally being more lenient on the illegal occupants / tenants with respect to the date that they need to vacate the rental property

Of course, these aren’t the only factors – changes in lockdown levels that negatively affect tenants’ income are also crucial reasons.

What does this mean for Landlords & Rental Professionals?

As hard as it may sound, the best advice is to ‘take action’ as soon as possible – i.e. as soon as the rent, and other amounts due, are not paid.

The facts above show us that, in the worst-case scenario (which is fortunately not always the case), where legal action is required to get your property back and re-rented, the legal process WILL take longer – and there is no way to speed up this process. So in genuine cases, where legal action is the only recourse, this action needs to be initiated as early as possible to minimise the losses to the landlord and get the property back on the rental market and generate rental income.

Problems become Harder to Fix the Bigger they Get

This truism is often forgotten – if you take the first steps (e.g. a Letter of Demand) while the problem (i.e. arrears) is still relatively small, you have a much better chance of being able to negotiate a solution with the tenant. The longer you leave (or ignore) the problem, the more unlikely it is that a solution that doesn’t involve eviction can be reached.

So, never delay taking the necessary action – remember that there are a series of steps required under legislation, and these are not ‘optional’ – if you don’t follow the right procedure, you will need to start over – and any delay will increase your losses AND delay re-tenanting of the property!

You need to . . .

  • Put the tenant ‘on notice’ that they are in breach and give then an opportunity to retify the breach, i.e. send them a Letter of Demand
  • If they do not satisfy the request in the Letter of Demand, the landlord may legall cancel the lease
  • If, and only if, they do not vacate the premises will the landlord need to apply for an eviction order

Source: TPN

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