Good news for South African landlords

Preferental is an artificial intelligence (AI) powered tenant screening app designed to protect landlords from fraudulent tenant applications, which can save them large sums of money.

Evicting a tenant who has failed to pay rent or isn’t upholding other aspects of their lease agreement can be a prolonged and costly exercise, requiring several time-consuming steps before any action can be taken.

Speaking to CapeTalk, Preferental founder and CEO Ross Fitzcharles explained that tenant screening is laborious, especially in the past few years.

He also noted an increase in fraudulent tenant applications where applicants are dishonest about their employment or tamper with their bank statements.

Roughly 75% of landlords in South Africa manage their own properties, so they risk missing these red flags.

“If you’re not doing tenant vetting on a daily basis, there’s no way that you’re going to pick this up,” said Fitzcharles.

“What we said is: we’ve got the tools. How can we build an app that actually assists landlords in doing effective tenant vetting? That’s sort of where the dream started.”

He explained that Preferental collects data from its credit partners and has embedded AI to verify the legitimacy of bank statements.

Fitzcharles said the AI identifies the metadata and the validity of submitted bank statements.

“So if the document isn’t downloaded from the bank itself or used as-is when received from the bank and you upload it, the AI immediately picks up that this is a document that has been tampered with,” he said.

“I think that’s one of the most crucial aspects in terms of understanding whether the person that’s sending you their bank statements has altered any of the information.”

He explained that roughly 75% of South African landlords take it upon themselves to manage their properties and lease agreements, which puts them at risk of falling victim to fraudulent applications.

“That’s a big number and some landlords have one, two, or maybe three properties. So you’re looking at tenant vetting happening once or twice a year, and these landlords don’t always have access to credit bureaus,” said Fitzcharles.

“They don’t know that you can actually run a credit report on a tenant.”

As a result, many take bank statements at face value.

“There’s no proper vetting being done by the majority of landlords, and I think it’s clearly because it takes a long time and a lot of experience,” he added.

Landlords who want to manage their own lease agreements can save a lot of time and money by screening potential tenants through the app.

Fitzcharles explained that evicting a tenant once you realise they can’t afford the rental is a costly exercise.

“Starting an eviction is like R15,000 and then you’re also looking at property damages and landlords having to foot the bill for the bond as long as the tenant is sitting in the property and not paying,” he said.

He added that Preferental is so confident in its screening capabilities that it offers a “Preferental Rental Promise” where it will pay eviction costs if it makes a mistake.