26% of rental applicants in South Africa flagged as high risk

South African landlords face a growing threat, with more than one in four rental applicants flagged as high risk during automated screening.

The country’s residential rental sector is becoming more convenient as it increasingly moves towards online applications and digital screening.

However, this shift comes as households face financial pressure from high interest rates, rising municipal tariffs, and unsecured debt.

According to PayProp’s Tenant Assessment Report, 26% of rental applicants are now flagged as ‘high risk’ during automated screening.

Just Property CEO Paul Stevens said this figure shows the financial strain facing households, as well as the growing sophistication of fraud in online rental applications.

“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%,” Stevens said.

He said the rental market is becoming increasingly divided. Demand remains strong for well-located rental properties as high property prices and living costs keep people renting for longer.

On the other hand, Stevens pointed out that the financial reserves of the average South African household are heavily compromised.

“Years of high interest rates, combined with aggressive increases in municipal tariffs, electricity, and basic utilities, are eroding disposable income,” he said.

“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.”

According to Stevens, a significant portion of the high-risk flags is linked to applicants having unsustainable debt-to-income ratios.

Applicants may appear financially suitable when assessed solely on their gross income. However, this changes once automated screening accounts for their credit card debt, personal loans, and vehicle finance.

“Applicants are frequently applying for properties despite being at the absolute edge of their financial capacity, with no buffer for unexpected expenses,” Stevens said.

Financial pressure is not the only concern for landlords and property managers. The shift towards online applications has also created more opportunities for digital fraud.

Stevens warned that documents traditionally used to assess rental applicants can now be manipulated using widely available editing tools.

“In today’s digital landscape, relying on PDF bank statements and printed payslips is both dangerous and obsolete,” he said.

“Modern editing tools make it easy for bad actors to falsify bank statements, fabricate income levels, and mask poor credit scores.”

He also cautioned about the growing risk of identity theft and impersonation. Stolen credentials can be used to secure leases, allowing fraudsters to default on payments or illegally sublet properties.

Changes for tenants and landlords in South Africa

These risks are changing South Africa’s rental landscape, with many property professionals now moving towards more comprehensive digital screening systems.

Instead of relying solely on documents provided by applicants, property managers can connect with credit bureaus and secure banking verification systems.

This allows them to verify an applicant’s identity, employment, banking history and affordability. Stevens said stronger screening can also benefit legitimate tenants.

“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,” he said.

The wider rental market remains relatively stable despite these risks. National rental escalations are at 4.7%, while TPN Credit Bureau data puts tenant good standing at 83.95%.

However, Stevens said landlords need to adapt as more of the rental process moves online. “The 26% statistic is a wake-up call for anyone who is still using spreadsheets and gut feel,” he said.

“The modern rental market is too fast, and the financial risks are too high, to rely on outdated methods. Managing risk properly in 2026 requires sophisticated technology, real-time data access, and professional oversight.”

Stevens recommended that landlords and property managers move away from relying on documents that can be easily altered.

They should request direct digital bank feeds or verified bank statements where possible, rather than relying solely on PDF documents.

Landlords should also assess net affordability, rather than looking only at an applicant’s gross income. This means taking into account credit card debt, personal loans, and other financial obligations.

Finally, applicants’ identities should be verified against official databases to reduce the risk of identity theft and lease impersonation fraud.