One in four SA rental applicants now flagged as high risk

• 26% of rental applicants are being flagged as high risk as household finances and affordability come under pressure.
• Digital manipulation of bank statements, income records and identities is making traditional manual tenant screening increasingly vulnerable.
• With 83.95% of tenants in good standing, landlords must distinguish genuine affordability risk from an otherwise resilient rental market.

South Africa's rental market is confronting a new combination of risks: financially stretched households, rising debt burdens and increasingly sophisticated digital fraud.

As rental applications move online, technology is making it faster and easier for legitimate tenants to find homes. But it is also exposing landlords and rental agents to manipulated financial documents, identity fraud and applicants whose income may look adequate until their total debt commitments are examined. The scale of the problem is significant.

According to PayProp's Tenant Assessment Report, 26% of South African rental applicants are being flagged as high risk during automated screening, more than one in every four prospective tenants.

At the same time, TPN Credit Bureau data indicates that 83.95% of tenants remain in good standing, while national rental escalations are around 4.7%.

That distinction matters. South Africa does not have a universal tenant-payment crisis. Rather, landlords are operating in a market where the majority of tenants continue to perform, but the financial consequences of selecting the wrong tenant are becoming considerably more serious.

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"The challenge lies in the small but high-impact percentage of tenants in severe arrears or serious non-payment, which recent industry metrics place at 6.15%." Paul Stevens, CEO of Just Property

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Rental risk at a glance

• 26% - Rental applicants flagged as high risk during automated screening, according to PayProp.
• 83.95% - Tenants in good standing, according to TPN Credit Bureau data.
• 6.15% - Tenants falling into the severe-arrears or serious non-payment category.
• 4.7% - National rental escalation rate.

Behind those numbers sits a household affordability equation being squeezed from several directions. Elevated borrowing costs over recent years, higher municipal charges, electricity and utility increases and significant unsecured consumer debt have reduced the financial buffers available to many households.

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"We're looking at a highly polarised market. On one hand, there's strong demand for well-located rental properties as high property prices and living costs keep people renting for longer."

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"On the other hand, the financial reserves of the average South African household are heavily compromised. When more than one in four applicants is flagged as high risk, it's a reflection of a consumer base that's stretched to its financial limit, “ says Paul Stevens

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The affordability gap behind the 26%

‍For landlords, one of the biggest risks is assuming that a strong salary automatically means a tenant can afford the rent. It doesn't.

A prospective tenant may earn a substantial gross income but simultaneously carry vehicle finance, credit-card balances, personal loans and other short-term debt.

Once those commitments are deducted, the applicant's true disposable income can tell a very different story.

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"Many applicants look great on paper based purely on gross income. However, once automated screening algorithms cross-reference real-time credit bureau data and factor in credit card debt, personal loans and vehicle finance, the true affordability gap becomes apparent." says Stevens.

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That affordability gap becomes particularly dangerous when tenants have virtually no monthly financial buffer.

An unexpected medical bill, vehicle repair, school expense or sharp utility increase can quickly turn a marginally affordable rental into an arrears problem. For property investors, net affordability therefore matters far more than headline income.

Digital fraud adds another layer of risk

‍Financial pressure is only part of the 26% risk equation. The digitisation of rental applications has created opportunities for a new generation of property fraud.

PDF bank statements, payslips and other financial records can be digitally altered. Income can be inflated, transactions removed and employment information manipulated. Identity theft presents another threat, with stolen personal information potentially being used to secure leases under false identities.

"In today's digital landscape, relying on PDF bank statements and printed payslips is both dangerous and obsolete." Stevens warns that sophisticated digital tools can allow fraudulent applicants to fabricate income levels and conceal poor financial histories.

For landlords managing a single investment property, one fraudulent tenancy can be particularly damaging. Lost rental income can quickly be compounded by legal expenses, arrears, property damage and the time required to regain possession and secure another tenant.

Automated vetting becomes essential

‍The industry's response is increasingly moving from document-based screening towards data-based verification.

Automated tenant-vetting platforms can connect with credit bureaus and secure financial verification systems to assess multiple risk indicators simultaneously. These systems can help verify:

• Identity and personal information
• Credit history and payment behaviour
• Income and banking information
• Existing debt commitments
• Debt-to-income ratios
• Overall rental affordability

This changes tenant screening from simply asking, "What does this applicant earn?" to the more important question: "What can this applicant sustainably afford?"

Automated verification can also identify inconsistencies far faster than manual screening. For Stevens, this does not only protect landlords. It also protects legitimate tenants.

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"When high-risk or fraudulent applications flood online portals, they create artificial competition and crowd out legitimate, hard-working tenants. By using strict, immediate digital filters, those risks can be weeded out early."

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PayProp and TPN data tell an important second story

‍The headline 26% high-risk figure is concerning, but landlords should not interpret it in isolation. TPN's 83.95% good-standing rate indicates that the overwhelming majority of South African tenants continue meeting their rental obligations.

That creates an important investment distinction. The residential rental market itself remains fundamentally active, supported by households renting for longer and strong demand for appropriately priced, well-located accommodation.

The greater challenge is tenant selection and risk management. In other words, the opportunity remains, but the margin for poor due diligence is shrinking.

Advice for landlords in 2026

1. Stop relying solely on PDFs
 Bank statements and payslips remain useful, but they should not be treated as unquestionable evidence.

Where possible, use verified financial information and professional tenant-screening platforms.

2. Measure net affordability
 Do not assess a tenant purely against gross salary. Factor in credit cards, personal loans, vehicle finance and other recurring debt commitments before deciding whether the rental is sustainable.

3. Verify identity at source
 Identity information should be cross-checked through legitimate verification systems to reduce impersonation and identity-theft risk.

4. Check payment behaviour
 A tenant's historical credit and rental-payment behaviour can provide valuable evidence of how financial commitments are managed.

5. Don't let urgency weaken due diligence
 A vacant property costs money, but placing the wrong tenant can cost substantially more. Landlords should resist accepting weaker verification simply to fill a property quickly.

6. Use professional oversight
 As tenant risk becomes more technologically sophisticated, professional property managers and rental agencies with access to current verification tools can provide an additional layer of protection.

The investor takeaway: technology is becoming risk insurance

‍For residential property investors, the 26% figure should be treated as a warning, not a reason to retreat from the rental market.

With more than eight in ten tenants still in good standing, the underlying rental market remains considerably stronger than the headline risk number might initially suggest. But the rules of tenant selection are changing.

Income alone is no longer enough. A bank statement alone is no longer enough. And intuition alone is certainly no longer enough.

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"The 26% statistic is a wake-up call for anyone who is still using spreadsheets and gut feel. The modern rental market is too fast, and the financial risks are too high, to rely on outdated methods."

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For landlords in 2026, protecting rental returns increasingly starts before the tenant receives the keys.

The winners will be investors who combine good properties with rigorous affordability assessment, verified identities, real-time data and disciplined tenant selection. In an increasingly digital rental economy, better data is becoming one of a landlord's most valuable forms of risk protection.

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