Debt, Not Retirement, Is Driving Two-Pot Withdrawals: What It Reveals About Rental Affordability

Understanding the Repo Rate Hike and Household Pressure

The South African Reserve Bank raised the repo rate by 25 basis points today, taking it to 7.25% and prime lending to 10.75%. The decision was unanimous, and the Governor pointed to a global oil shock and headline inflation likely to run above 5% into next year.

On its own, that is a bond-holder story. Read alongside this year's Two-Pot retirement withdrawal figures, it is also a story about how stretched household budgets already are, and what that means for the rental market.

What the Two-Pot Numbers Reveal

The Two-Pot retirement system allows members to withdraw a portion of their retirement savings each tax year, taxed as income on withdrawal. A Momentum Corporate survey found that 52 per cent of eligible members have now made a withdrawal, despite most members initially saying they would use it only in a genuine emergency.

Mid-career millennials show the highest rate of repeat withdrawals. This is a group typically juggling a home loan or rent, other debt, and childcare costs simultaneously. According to the data:

• 44 per cent of withdrawals went toward paying off debt.
• 23 per cent went toward everyday living expenses.
• 20 per cent went toward education costs.

From Paying Off Debt to Paying the Rent

What has shifted this year is the nature of that debt. Old Mutual Corporate reports that the leading reason for withdrawing has moved from debt repayment toward basic living costs: covering food, supporting family members, and paying school fees, rent, and electricity.

Sanlam's 2026 Benchmark Survey points the same way. The funds being drawn down are increasingly filling the gap between income and monthly costs, rather than clearing a long-term loan.

This is a meaningful shift for anyone reading household affordability signals. Retirement savings are typically the last resource a household draws on. Using them to cover rent points to real pressure on disposable income.

The Substantial Rand Value Involved

The scale of these withdrawals is significant. Alexforbes alone has processed more than one million Two-Pot claims since the system began, at an average of roughly R 14 000 per claim.

SARS has collected in the region of R 15 billion in tax from Two-Pot withdrawals to date, along with close to R 1 billion recovered in outstanding tax debt deducted directly from payouts.

Every Rand withdrawn now is a Rand that will not compound toward retirement. Households are making this trade-off anyway, which illustrates how little room is left elsewhere in the monthly budget.

Compounding Pressure on the Consumer

A 25 basis point hike on a R 1 million bond adds roughly R 168 a month, or a little over R 2 000 a year. While modest in isolation, it is layered onto a household already struggling with rising costs.

Petrol rose by R 1.34 a litre and diesel by R 3.15 a litre this month alone. With the SARB flagging inflation above 5 per cent into early next year, the cost of living remains a primary concern for residents across Centurion and Pretoria East.

What This Means for the Local Rental Market

None of this points to a collapse in rental demand. Gauteng's rental fundamentals have held up through tighter years than this one. However, it does argue for two critical approaches in the current climate:

• Rigorous Affordability Checks: Landlords should treat these as more than a formality. A proper assessment, weighed against the rent, determines if the tenant's income has sufficient "breathing room."
• Conservative Budgeting: Tenants signing a new lease should build in the cost of potential rate moves. A household with no buffer against a R 300 increase in debt repayments is a household at risk regarding rent increases.

We manage residential rentals across Pretoria East and the Centurion corridor, and affordability sits at the centre of how we vet every application. Speak to the Kingsmark team about managed rentals or contact us on 012 443 6595 to ensure your property interests are protected under the Rental Housing Act.