The South African rental market in 2024 is navigating a paradox: historically low vacancy rates alongside a rise in squatting tenants. The TPN Squat Index reports squatting rates increasing from 3.48% in Q4 2023 to 3.71% in Q2 2024. Squatters—tenants who fail to pay rent for three consecutive months but remain in the property—pose serious financial risks for landlords, disrupting cash flow essential for expenses like maintenance and mortgage payments.

While national vacancy rates hit a record low of 5.57% in the first half of 2024—a 17.21% decrease year-on-year—squatting offsets the benefits of high occupancy. Tenants who occupy properties without paying create a “hidden vacancy,” where landlords incur costs without corresponding revenue. Legal eviction processes further prolong financial strain.

Tenant payment behaviours show a modest improvement, with those in good standing rising from 82.83% in Q1 to 83% in Q2 2024. However, lower-income tenants remain problematic: in the under R3,000 category, 15.12% made no payments, and 14.47% paid only partially. Tenants in the R3,000 to R7,000 bracket displayed erratic patterns, with 82.17% in good standing and around 65% paying on time, complicating landlords’ financial planning.

Despite strong rental demand, landlords must balance the benefits of low vacancies with the challenges of rising squatter rates and irregular payments. Proactive management and adherence to legal procedures will be critical for navigating these dual realities, ensuring financial stability amid ongoing market complexities.