With nearly 1 in 3 tenants classified as high-risk, now’s not the time to skip on tenant screening!
According to the PayProp Rental Index for Q2 2024, a significant 28.4% of tenants have been classified as high-risk. With nearly a third of tenants facing financial difficulties, it is crucial for landlords to conduct thorough tenant screening. Here’s how you can protect your investment and secure reliable tenants.
Tenant Screening Trends: A Closer Look at Risk Levels
The PayProp Rental Index reveals that tenant risk remains high, with over one in four tenants falling into the high-risk category. This is where Preferental’s tenant screening tools come in, offering landlords access to critical financial data and background checks that help mitigate risk.
Affordability Challenges: The Debt Burden
Tenants earning less than R40,000 per month are under increasing pressure, with as much as 46.7% of their income going towards debt repayments, according to the PayProp Rental Index. With tighter budgets, these tenants are more likely to fall behind on rent. Thorough screening, such as Preferental’s detailed affordability checks, can help landlords assess whether a tenant can afford the rent and avoid late payments.
One common rule of thumb for rental affordability is that tenants shouldn’t spend more than 30% of their income on rent. The South African average of 30.3% is just above that, but those earning below R30 000 per year spend significantly more than this recommended maximum on average.
Vetting Tenants: The Preferental Advantage
Preferental’s tenant screening services offer landlords a comprehensive way to evaluate tenants, ensuring that those classified as high-risk are identified early. From credit checks to rental history and affordability calculations, our tools are designed to protect landlords from tenant defaults and late payments, which are becoming more prevalent as seen in the PayProp Rental Index.
The risks in the rental market are real, as highlighted by the latest PayProp Rental Index, but with Preferental’s robust tenant screening services, landlords can safeguard their investments. Contact Preferental today to find out how we can help you choose tenants wisely and minimise financial risk.