The #1 reason tenants default on rent: They can't afford it. Sounds obvious, right? But landlords often skip affordability checks entirely, focusing instead on credit scores or references. Big mistake.
A tenant with perfect credit and excellent references who earns £800/month can't afford £700/month rent. They'll default within months. Conversely, a tenant earning £3,500/month paying £800/month rent is a green light—they have a safety margin.
In this guide, we'll teach you the exact math to assess tenant affordability and identify overextended applicants before they become eviction cases.
Tenants who are "affording it by luck" (living paycheck-to-paycheck with rent consuming 50%+ of income) are extremely likely to default when:
Result: Eviction, court costs, lost rent, 4-6 months void period. Total loss: £3,000-£5,000+
The industry standard is the 30% affordability rule: Rent should not exceed 30% of gross monthly income.
Pro Tip: Most institutional landlords use 40% as the absolute ceiling. Below 30% is the safest zone.
Analysis: Amy has £3,400 left after rent. Enough for living expenses, transport, food, savings, and emergencies. Low default risk.
Analysis: Bob has £1,480 left for all living expenses. If he has car payments (£200), student loans (£150), or credit card debt (£100), he's down to £1,030/month for food, transport, utilities. One unexpected expense = default.
Analysis: Chris has only £950/month for ALL other expenses (food, transport, utilities, phone, insurance). One £200 unexpected expense, and he's skipping meals or missing rent. REJECT or request additional guarantor/deposit.
The 30% rule is a baseline. Smart landlords stress-test to see if the tenant can survive unexpected changes.
Green Tenants Pass All Stress Tests. Red Tenants fail most of them.
Use GROSS income, not net. Here's why:
If you use net (£2,800): 30% = £840 affordable rent. But the landlord's rent still comes from gross income. Using net underestimates affordability by showing lower disposable income than reality.
For joint applications, calculate individual AND combined affordability.
Red Flag: If one applicant's individual affordability is RED, that's a risk. If Bob loses his job, Amy alone can't afford the rent.
For Yellow/Red affordability tenants, use a guarantor (usually a parent or family member) who co-signs the tenancy. The guarantor becomes personally liable if the tenant defaults.
Guarantor must have: Strong credit history, income 3x+ the rent, and be willing to sign the guarantee agreement.
Manual affordability calculations work, but AI-powered verification calculates affordability instantly while cross-validating income across multiple documents.
Run a Forensic ScanOr use our free affordability tester to see how tenant finances stack up.
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