The national average for the number of tenants paying on time in the third quarter is almost 70%.
A recent report has found that low-income South Africans are under financial pressure, with tenants struggling to pay their monthly rent, especially those paying rent below R3 000.
The 2025 third-quarter TPN Residential Rental Monitor showed that rent arrears are a worrying trend for landlords.
The report tracks how the residential rental sector is performing and whether tenants are keeping up with their rental obligations. Waldo Marcus, Director of Corporate Marketing, MRI Software, says TPN Credit Bureau provides an overview of the residential rental market in the country.
Its escalation data, for example, relies on actual rental figures rather than data provided by a sample of agents to determine the rental inflation rate. TPN data spans a diverse range of investor types and portfolio sizes, representing the broadest dataset available within the rental sector.
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Rent continues to increase
The report noted that landlords and agents continue to maintain a bullish approach to rental escalations in the third quarter, increasing investments into a sector that is showing positive returns. However, it appears that cracks in consumer household budgets are appearing.
“The Consumer Price Index (CPI) has been showing an upward trend since May 2025, which does not bode well for consumers who are highly indebted and have limited room for income growth in the immediate future,” reads the report.
TPN’s data reveals that the national average rental increased from R9 308.68 in the second quarter of 2025 to R9446.43 in the third quarter. National rental escalations increased from 4.62% in the second quarter of 2025 to 4.76% in the third quarter, across both sectional and full title rental units.
Lower rent amounts increase aggressively
The report noted that lower rental values have increased more aggressively since the start of 2024. Rentals of less than R1 500 per month increased from 6.33% in the second quarter to 7.86% in the third quarter of 2025.
Rental units priced between R1 500 and R3 000 are following the same accelerated growth trend, but at a slower pace, increasing from 4.33% in the second quarter to 4.49% in the third quarter of 2025, below the national average.
At the higher end of the affordable rental category, units priced between R3 000 and R4 500 a month experienced below the national average rental growth, increasing from 3.72% in the second quarter to 3.81% in the third quarter.
“The affordable rental market (less than R4 500) makes up 26.7% of the total formal rental market,” reads the report.
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Payment defaults
The report highlighted that tenants paying less than R3 000 per month continue to struggle to meet their monthly obligations. Only 54.77% of these tenants pay on time.
The national average for the number of tenants paying on time in the third quarter is almost 70%. No payment and partial payments towards rent remain elevated, both increasing quarter on quarter.
“This tenant segment makes up 12.8% of the tenant population, up from 12.5% in the previous quarter,” reads the report.
“This is the first increase in the less than R3 000 per month rental value band population this year. However, the overall trend is that fewer tenants are falling in this rental value band, which is expected to remain in the 12% range for the short and medium term as rental inflation migrates more tenants into the higher rental value bands.”
Tenants paying between R3k and R7k
The report revealed that tenants paying between R3 000 and R7 000 per month also struggle to keep up with payments. Only 66.65% of tenants were able to make payment on time, up from 65% in the second quarter.
The report noted that an improvement in payment behaviour is primarily driven by an improvement in partial payments.
“The overall good standing for the rental value band improved from 83.03% in the second quarter to 83.68% in the third quarter. The current expectation is that tenants in good standing within this rental value band will fluctuate between 83% and 84%, as balancing household budgets remains challenging, especially for lower-income households.”
More tenants struggle
Data showed that tenants paying rent between R12 000 and R25 000 per month have also started defaulting on payments. Non-payment increased marginally to 3.29%, but partial payments slipped, resulting in a lower good-standing number of 88.68%, down from 89.1% in the second quarter.
“The higher rental value bands’ payment behaviour and good standing remain stable with only marginal changes,” reads the report. “We expect good standing levels to be sustained at these levels. However, landlords and property managers will have to be more aggressive with collections and implementing remedial actions to drive improvements within individual portfolios.”
The luxury rental market accounts for 1.8% of the total rental market, unchanged from the previous quarter, but is expected to break through the 2% mark in 2026.
“Tenants in this bracket are paying on time, improving from 65.92% in the second quarter to 69.83% in the third quarter. Tenants in good standing improved from 82.16% in the second quarter to 84.12% in the third quarter,” reads the report.
“Non-payment improved from 6.52% in the second quarter to 5.69% in the third quarter. Partial and late payments also improved. Strict rental collections within the luxury rental bands are showing positive outcomes.”
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