Busting the myth! Renting to a non-South African is more of a risk

Let’s face it, foreign tenants get a bad rap. Landlords fear the flight risk that a tenant on another passport may pose but when you lay out the legalities, it becomes clear that foreign tenants are no more of a risk than South African citizens are. With a growing 13.5% of tenants applying for rental properties on a foreign passport, there are a few myths that need busting!

MYTH: It is illegal to rent to a non-South African
FACT: It is completely legal to rent to a non-South African tenant that is in the country legally.

A foreign national must be in possession of a valid permit which could be granted for reasons such as work, travel or a student permit to name a few.

As the landlord, you need to check that the term of the lease does not extend past the expiry of the foreign tenant’s permit as this would be considered harbouring an illegal foreigner – a criminal offense!

MYTH: You can’t vet a foreign national
FACT: You can perform a credit check on a tenant’s passport number.

If the prospective tenant has made multiple temporary trips into the country, it is very possible that the applicant will have previous TPN rental accounts on their credit profile.

The passport number, date of birth and surname MUST BE ACCURATE for the enquiry to result in a full profile on the tenant. Factual accuracy is so important here because a passport number cannot be checked against the Department of Home Affairs’ records in the same way that a South African ID can. Any incorrect details will simply create a ‘ghost tenant’ on the system with no credit profile returned.

There are times when you capture an applicant’s details accurately but the credit check on a foreign passport returns a thin file (a credit check containing very few to no previous accounts). This is no different to a young professional looking to rent their first property, or a recently divorced individual whose ex-spouse signed on all their previous accounts. There simply isn’t much information available on them. In this instance, you should mitigate the risk by taking a double deposit and asking for a surety document (available in the LeasePack) to be signed with someone who has a longer credit history.

MYTH: You can’t take legal action against a foreign national
FACT: The legal process for an eviction is the same whether the person you are evicting is a foreign national or a South African citizen. It can be said that a foreign national has more to lose through an eviction process as they may have to leave the country on top of being evicted.

CASE STUDY: In a recent case, a client received a thin file and queried the matter with us as they were aware that the prospective tenant was in possession of a South African credit card which was not appearing on the tenant’s credit check.

After a quick analysis of the credit report it was found that the client had inadvertently included an extra digit in the prospective tenant’s passport number and had incorrectly captured the tenant’s date of birth – this caused a blank report to be drawn.

The client pulled a fresh report against the tenant with the correct passport number and was returned a credit check with multiple accounts and previous rentals that allowed the client to place that tenant successfully!

TPN PropBay  I  TPN RentBay

Vacancy Survey Report Q4 2023

The many challenges currently facing consumers, including the increased cost of living, has benefited the residential property investor and the various industries that support the overall residential rental market ecosystem. Rentals continue to grow,…

Find out more