Landlords beware: 26 per cent of rental applicants in South Africa classified as high risk in Q1 2025
Image: Henk Kruger/ANA/African News Agency
More than a quarter of South African rental applicants were classed as high-risk in the first quarter of this year.
A detailed risk analysis in the latest PayProp Rental Index highlighted that this is a significant challenge for landlords and rental agents.
Based on data from the Tenant Assessment Report, PayProp's market-leading tenant screening tool, 26% of prospective tenants fell into the scoring system's highest risk bracket, up from 25% a year ago.
'Landlords are seeing improved returns from healthy rental price growth in 2025, but it's important not to get complacent,' says André van Rooyen, head of sales at PayProp.
'Tenant affordability is lower due to the cost of living in many provinces, and with one in four applicants potentially presenting a payment risk, thorough vetting is non-negotiable,' van Rooyen said.
Traditional credit checks were said to offer only part of the picture when it comes to assessing tenant payment reliability, as they score the applicant based on their debt repayment history but often do not take rental payments into account.
In contrast, PayProp combines credit scoring with rental payment histories captured from the platform to reveal where tenants fall on the risk spectrum.
Analysis by PayProp ahead of a recent training webinar found that it was 94% better at predicting bad tenant behaviour than a traditional credit score when applied to a sample of real tenant data.
In the first quarter of this year, 39.6% of lease applicants were rated minimum-risk, 20.0% were low-risk, 14.5% were medium-risk, and 26.0% were high-risk.
This distribution across the risk spectrum suggests that rental applicants are becoming more concentrated at both ends of the risk scale lately, making careful tenant selection more important than ever.
Income was said to be the strongest determinant of tenant risk. Among applicants earning R80 000 or more per month, 60.6% were classed as presenting minimum risk and just 12.2% as being high-risk. In the lowest income bracket (R10 000 - R20 000), only 23% qualified as minimum risk, while 37% were high-risk.
'Affordability is one of the first things any agent will check, and this helps demonstrate why,' says van Rooyen. 'It also means that careful vetting is even more essential for lower-priced properties, as applicants are more likely to fall into lower income brackets.
"However, there are high-risk and low-risk tenants in every income bracket, and using smarter tools helps agents identify low-income, low-affordability tenants who nevertheless have perfect payment records.'
Video Player is loading.
Play Video
Play
Unmute
Current Time
0:00
/
Duration
-:-
Loaded :
0%
Stream Type LIVE
Seek to live, currently behind live
LIVE
Remaining Time
-
0:00
This is a modal window.
Beginning of dialog window. Escape will cancel and close the window.
Text Color White Black Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Transparent Semi-Transparent Opaque
Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps
Reset
restore all settings to the default values Done
Close Modal Dialog
End of dialog window.
Advertisement
Next
Stay
Close ✕
Ad loading
Age was also said to play a clear role, as the 20 - 29 age group showed the lowest share of minimum-risk tenants (29.6%), likely due to thinner credit files and shorter rental histories.
However, despite being unknown quantities in normal credit scoring terms, this group tends to have more disposable income after debt and rent, making them potentially better prospects than raw scores may suggest.
In contrast, 61.3% of applicants over 60 were classified as presenting minimum risk, and tenant risk declined sharply for all age groups over 50, thereby indicating a pattern likely linked to more stable financial positions and mature credit profiles.
According to Experian's latest Consumer Default Index (CDI) for the first quarter of this year, despite their active economic roles, young South Africans face barriers in accessing the credit market.
Representing nearly 24% of the adult population, the youth segment (consumers around 30 years and younger) was said to account for only 9% of the total credit market, holding just 3% of outstanding debt.
Vehicle Asset Finance (14%) and Retail Loans (10%) are the most common credit products for youth, reflecting their current financial needs and market accessibility. In contrast, youth only hold 1% of the Home Loans market, underscoring the long-term financial milestones that remain largely out of reach for many people.
Interestingly, the report finds only slight gender-based differences in tenant risk, despite women earning roughly 80% of what men do, according to Stats SA.
Some 40.1% of men were assessed as minimum-risk, compared to 39.1% of women. One possible explanation is that women spent 3.2% less of their income on debt repayments than men, improving their overall affordability profile.
While trends by income, age and gender offer useful insights, van Rooyen reiterates that every tenant is unique.
'Each demographic contains both high and low-risk individuals,' says van Rooyen.
'That's why risk reporting based on proven payment behaviour is essential for agents managing tenant selection. It's not just about reducing risk for agents, it also ensures that good tenants who pay their rent reliably can go to the front of the line, no matter their income levels or what's left after servicing current debts,' van Rooyen said.
'With more rental applicants falling into the high-risk category than a year ago, the days of relying solely on gut feel or credit scores are behind us. The smartest agencies are combining data sources for a full-circle view of tenant reliability.'
According to the South Africa Property Market Predictions for 2025 published by the Landlord Association of South Africa (LASA) in January, the South African property market is set to undergo significant changes in 2025, influenced by shifting economic dynamics, evolving consumer behaviour, and potential legislative amendments.
The National Residential and Commercial Landlords Association said the South African Reserve Bank (SARB) was expected to maintain a cautious monetary policy stance in 2025.
It said that while inflation may stabilise around the target range of 3% to 6%, marginal interest rate increases could be implemented to manage global economic pressures. This would impact home loan affordability and demand for residential properties, it said.
LASA said that despite a challenging global economy, South Africa's GDP growth is forecasted to recover modestly in 2025, supported by mining exports and infrastructure investment. It said urban areas, particularly Gauteng and the Western Cape, were likely to see a resurgence in property development and demand.
Independent Media Property
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Citizen
12 hours ago
- The Citizen
Weekly economic wrap: politics dominate, lower inflation expectations
Between fears of how the economy will react to the DA-ANC tensions and the US' new bill and tariffs, inflation expectations decreased. Politics dominated the economic news this week, with local and global politics taking centre stage, while a South African survey on inflation expectations had good news for consumers from all the groups surveyed. Lisette IJssel de Schepper, chief economist at the Bureau for Economic Research (BER) points out that while tensions persisted in South Africa between the DA and ANC, international headlines were dominated by the passage of the 'Big Beautiful Bill' in the US and the fast-approaching US tariff deadline. Bianca Botes, director at Citadel Global, says gold gained, while oil slipped as fiscal and trade risks weigh on commodities. 'Gold advanced to around $3,330/ounce, maintaining a solid position due to lingering uncertainty, even in an improved-sentiment environment. 'The US Tax-and-Spending bill's anticipated $3.3 trillion-plus impact on the deficit, along with the risk of new tariffs, bolstered gold's appeal.' ALSO READ: Policy Uncertainty Index drops slightly while global and local uncertainty remain Oil markets and the rand trending lower She says oil markets, on the other hand, are trending lower, with Brent Crude falling to approximately $68.50/barrel. 'Market sentiment was shaped by speculation that the expanded Organization of the Petroleum Exporting Countries (OPEC+) may increase output at its upcoming meeting, adding to downward pressure. 'Nonetheless, medium-term forecasts remain positive, with some analysts expecting higher average prices in 2025 due to persistent supply constraints outside OPEC and steady demand growth. However, geopolitical factors remain in play, particularly US sanctions on Iran, which added a layer of uncertainty to the global supply picture.' The rand kept surprising economists, strengthening to around R17.50/$, its strongest level since late 2024, supported by a declining dollar, elevated gold prices and improving local political sentiment. 'While the rally has been encouraging, the rand's outlook remains sensitive to both domestic developments and broader commodity market dynamics.' Busisiwe Nkonki and Isaac Matshego, economists at the Nedbank Group Economic Unit, say the rand was buoyed by higher global risk appetite this week, firming to its strongest level since the second week of November, trading at R17.60 on Friday afternoon. ALSO READ: Inflation expectations almost at four-year low Inflation expectations looking good De Schepper says according to the BER's inflation expectations survey, expectations declined across the board in the second quarter, with the inflation expectations of all three social groups, (businesspeople, trade union representatives and analysts) decreasing, with the downward adjustment extending across the forecast horizon. On average, the respondents expect that headline consumer inflation will be 3.9% during 2025, then rise gradually to 4.3% in 2026 and 4.5% in 2027. The inflation expectations of households for the next 12 months decreased to 5.4%, from 5.7% before. This is the lowest rate since the fourth quarter of 2021. 'The moderation in expectations not only firms up the likelihood of a 25 basis points rate cut in July but should also support the South African Reserve Bank's (Sarb) desire to shift to a lower inflation target. Mamello Matikinca-Ngwenya, Siphamandla Mkhwanazi, Thanda Sithole and Koketso Mano, economists at FNB, say the household experience of inflation is determined by spending patterns. 'While lower-income households will be more affected by food, higher-income households will be more sensitive to transport and insurance costs. That said, higher household expectations reflect the nuances beyond headline inflation readings. 'This is a dynamic that will also affect how quickly the Sarb is able to efficiently and sustainably achieve a lower inflation objective. High administered inflation may need to be compensated for by further non-admin core disinflation, which suggests less monetary policy easing. That said, the efficacy gains from a credible central bank and effective communication cannot be overlooked.' ALSO READ: Absa PMI increases but in contractionary territory for eighth consecutive month PMIs a mixed bag again The Absa Purchasing Managers' Index (PMI) increased by 5.4 points in June to reach 48.5, the second-highest reading this year and the largest monthly increase since September 2024, although it remains below the neutral 50 points. The S&P Global PMI, on the other hand, decreased by 0.7 points to 50.1 in June. While it remains in expansionary terrain, the underlying data showed output and new business declines, De Schepper points out. Furthermore, she says, the forward-looking confidence index slipped to its lowest level in four years. 'The divergence between this index and the Absa PMI could reflect survey timing: the Absa survey was conducted after the end of the 12-day war between Isreal and Iran and amid a lull in global tariff news, while the S&P survey was fielded during the final two weeks of the month and likely captured more of the lingering uncertainty.' Matikinca-Ngwenya, Mkhwanazi, Sithole and Mano say the good news in the Absa PMI is that new sales orders surged by 7.8 points, driven mainly by domestic demand. 'Despite stronger demand, production declined slightly, and supplier delivery times lengthened, likely due to increased activity rather than supply issues.' ALSO READ: New vehicle sales finish first half of 2025 on a noteworthy high New car sales keep increasing Naamsa reported that new vehicle sales increased by 18.7%, slightly down from 22% in May, with sales increasing for a fourth consecutive quarter. Exports also bounced back with 7.9% growth from a 14.6% contraction in May. Nkonki and Matshego say new vehicle sales surprised on the upside in June, much higher than their forecast of 14.3%. They noted that imported models outperformed those produced by local OEM's, reflecting heightened price sensitivity among consumers given still-tight household budgets. 'The broader recovery in vehicle sales is supported by subdued inflation, better credit conditions and the 100-bps drop in interest rates. However, the outlook is tempered by soft business confidence and lingering uncertainty around trade policy. Still, the industry should benefit from a more supportive macroeconomic backdrop heading into the second half of the year.'
The South African
12 hours ago
- The South African
Vodacom Bulls: Jake White out, Johan Ackermann in?
The Vodacom Bulls and Director of Rugby Jake White parted ways on Friday, with Johan Ackermann emerging as the frontrunner to succeed the former Springbok World Cup-winning coach. According to Rapport , Ackermann, the former Lions coach, is favoured to take over in the coming weeks. He is currently serving as a consultant with the Junior Boks and is expected to work with the team until the conclusion of the U20 Rugby Championship. Reports surfaced earlier this week indicating that Ackermann, who shares a strong relationship with Bulls CEO Edgar Rathbone, is likely to replace White. On Friday afternoon, the Vodacom Bulls and Jake White released a joint statement regarding their separation. 'With many years' coaching experience, I felt it would be difficult to get the squad to perform to the next level. Therefore, in the best interest of both myself and the Bulls, I feel it's time for a new chapter. It's time for this group to have a new voice,' the statement read. 'I have enjoyed my time in Pretoria. I met some wonderful friends. I believe that rugby is like life – you win some you lose some. You learn as you grow. You need to be strong and courageous and, most importantly, it isn't always fair. 'I would like to thank all the loyal supporters, the Bulls staff that worked tirelessly, and to the players for their hard work and dedication. I wish BBRU president Willem Strauss and the amateur game lots of success in the future. To the shareholders, I will always be grateful for all the support and financial backing they gave, far and beyond any other club' 'Thank you for the privilege. To the Board for their support and CEO, Edgar Rathbone, coaches and management, it was great to be part of this winning culture. To be part of Bulls rugby history has been an absolute honour. I wish Bulls rugby all the best. Hou die blou bo!' Under Jake White, the franchise reached three consecutive United Rugby Championship (URC) finals but lost all of them. Let us know by leaving a comment below, or send a WhatsApp to 060 011 0211. Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.
The South African
12 hours ago
- The South African
Egypt and Sudan push back as Ethiopia finishes Nile dam
Prime Minister Abiy Ahmed announced the completion of the Nile dam project, the Grand Ethiopian Renaissance Dam (GERD), during a parliamentary address on 3 July 2025. The GERD began construction in 2011 with a $4 billion (about R73.6 billion) budget. It is the largest hydroelectric project in Africa, measuring 1.8 km in width and 145 metres in height. Furthermore, the Nile dam is expected to generate more than 5 000 megawatts of electricity when it opens in September, according to Abiy. In February 2022, electricity generation began, and two turbines are now producing electricity. The dam is located 30 kilometres from Sudan's border, in Ethiopia's northwest region. Sudan and Egypt reiterated their opposition to the GERD's unilateral completion without a formal agreement. As a result of the Grand Ethiopian Renaissance Dam (GERD), 97% of Egypt's water comes from the Nile, and the country is concerned about its access being reduced. Moreover, Sudan voiced concerns about the security of its dams and water infrastructure downstream. More than a decade of intense negotiations has not yielded a trilateral agreement. Sudan's Sovereign Council General Chairman Abdel Fattah al-Burhan and Egyptian President Abdel Fattah el-Sisi both denounced unilateral actions in the Blue Nile Basin on 30 June. Both leaders reaffirmed their commitment to regional legal frameworks and water security. 'The GERD is a collective opportunity, not a threat to neighbouring countries,' Abiy Ahmed emphasised. He declared that Ethiopia is willing to discuss water-related issues with Egypt and Sudan in a positive manner. Ethiopia's advancement would not come at the expense of others, Abiy reaffirmed. Across the Nile basin, he promoted 'collective advancement, collective energy, and collective water'. Ethiopia claims that economic growth and electrification depend on the Grand Ethiopian Renaissance Dam. Half of Ethiopia's population does not have access to electricity, according to World Bank data. Egypt announced the cessation of negotiations in December 2023 as a result of Ethiopia's unilateral acts. Sudan continues to be unstable due to persistent civil strife and fluctuating political alignments. The African Union (AU) has advocated for fresh engagement; nevertheless, official mediation has not recommenced. International experts caution about rising tensions in the absence of a formal water-sharing mechanism. Ethiopia asserts that it does not need external approval to construct infrastructure within its borders. The GERD symbolises national pride and regional conflict in East Africa. Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 11. Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news
