Almost two of every five tenants in South Africa are risky. On average, 14.2% of SA tenants are classified as minimum risk according to their credit scores, while 37.2% are high risk. According to the PayProp Rental Index from the third quarter of 2018, this high-risk contingent of tenants spend about 33% of their net income on rent.
A widely accepted unwritten rule is that a tenant shouldn't pay more than 30% of net income on rent. While PayProp data shows the average percentage of rent paid by tenants in the third quarter of 2018 was indeed 30%, there is also a correlation between a tenant's risk level, determined by credit score, and the percentage of net income spent on rent.
Tenants with higher credit scores spend less of their income on rent than high risk and very high risk tenants. Lower risk tenants spend less than 30% of their income on rent, and tenants with the lowest risk spend only 24% of income on rent.
