Agents should rethink tenant risk as debt pressure mounts – new affordability data

As consumers’ debt burden mounts, agents will need to take a longer-term view of tenant risk.

A deep dive into rising tenant debt figures in the latest PayProp Rental Index (Q4 2025) shows agents will need to look at tenant affordability more carefully, even as stable income figures and rent-to-income ratios seem to show all is well on the surface.  

Rising debt

PayProp Commercial Director Michelle Dickens says while tenant incomes continue to rise modestly, increasing debt burdens are placing greater pressure on household budgets.  

The average rental applicant earned R44 683 per month in Q4 2025, up 3.5% year-on-year. However, average debt repayments – already 60% more than the average rent – continue to grow as a proportion of income while rent as a percentage of income has remained stable.  

On average, tenants spent 46% of their income on debt, up from the previous year’s 44.1%, while rent spending was slightly down year-on-year at 28.4% of income. As a result, tenants had just 25.5% left as disposable income on average, down from 27.2% a year earlier.

“While rent remains a key consideration, the data shows that debt is increasingly also a primary constraint on tenant affordability,” says Dickens. “And with the Reserve Bank expected to hold interest rates steady this month, it’s unlikely that debt burdens will fall in the near future.”

Rethinking affordability

Dickens says tenants may appear more stable on the surface, judging solely by the stable proportion of income spent on rent. However, once debt is accounted for, they are in fact under increased financial pressure.

For agents, this reinforces the importance of using more sophisticated affordability and risk assessment tools that don’t only look at credit history or pure rental payment performance. When placing tenants, affordability factors like disposable income after debt may not immediately translate into rent arrears, but it is a risk factor potentially threatening future payment. Dickens says this can be mitigated with sound collection and arrears management practices as well as regular affordability checks after initial placement. Data from PayProp shows that 64% of tenants in arrears respond to automated arrears reminders within 48 hours.

Understanding tenants’ debt spending, and how it can change with interest rates, will help agents place tenants that can pass follow-up affordability checks.

Higher incomes improving tenant risk, but not for everyone

Despite the drop in disposable income in Q4 2025, the tenant risk picture looked more positive than it did a year earlier. 43.6% of applicants were classified as minimum risk, up from 40.8% a year earlier. At the other end of the risk spectrum, the share of high-risk tenants declined from 25.8% to 23.9%.

This may have been helped by the rise in applicants’ average income. Tenants with higher incomes tend to pose less risk: a 60.4% majority of those earning R80,000+ a month are classed as minimum risk.

Women face higher rent burden despite lower debt levels

The PayProp data also revealed a widening gender gap in the rental market, with women facing greater affordability pressure despite spending less on debt repayments on average.

In Q4, 2025, male rental applicants earned 26.2% more than female applicants, up from the 25.6% recorded a year earlier. Women spent 30.3% of their income on rent, compared to 26.7% for men. However, women carry lower debt burdens, spending 43% of their income on debt compared to 48.8% for men. This results in women having slightly higher disposable income than men, despite earning less overall.

Dickens says while women are earning less and spend a larger share of their income on rent, they are less indebted. “This gives women a greater ability to absorb financial shocks without it affecting their rent payments,” says Dickens.  

A more complex picture of tenant affordability

Overall, the data highlights a more nuanced picture of tenant affordability in South Africa. While rental growth has slowed and incomes have improved, rising debt repayments and structural inequalities, such as the gender income gap, are still shaping financial outcomes for tenants.

“Understanding how tenants balance rent, debt and disposable income is key to making better placement decisions and maintaining stable rental portfolios in a market where underlying tenant pressure is increasing,” says Dickens.  

For more insights into tenant spending and rental growth, read the latest PayProp Rental Index.