More and more landlords are realising the importance of doing thorough tenant checks. Relying on “gut feel” and trusting in your own judgement is outdated and quite frankly in this modern age, with fraud and serial bad tenants around, quite risky.
Experienced landlords know that you cannot rely on trust anymore, a sceptical approach to any new tenant, unfortunately, is vital if you are to avoid trouble. Most tenants of course are reliable, they pay their rent on time and look after your property, but if you like to gamble with the one in 20 or so that are real trouble for their landlords, then go ahead and had over the keys without a proper screening process – you will almost certainly regret it.
Knowing the trouble, headaches, stress and worry, not to mention the finical loss a bad tenant can bring, it’s well worth taking a bit of extra time and trouble to properly screen, verify and select your tenants.
When you next let your property and consider a potential tenant for your property, you should know exactly who you are dealing with, their identity, their track-record on payments, their behaviour in a previous tenancy if there is one, and their ability to properly manage their finances – a good credit score is essential. Without doing careful checks you will never find out if they are a serial bad tenant with a list of County Court Judgements (CCJs) as long as your arm.
Without the confidence a good screening process gives you, you are gambling with your most prized asset, the rental property you are about to let. Too late when you’ve handed over the keys, the tenancy is in place and it will take you up to a year to take re-possession if it all goes wrong.
Only by doing a thorough assessment can you make an informed decision and know with a high degree of confidence that the tenant is going to pay the rent on time and keep your property in good condition.
Renting out a property will always carry some risk, no matter how many checks you do, 20,000 claims for possession by landlords last year can attest to that, but a thorough referencing process will reduce that risk to a minimum, saving you time, trouble and money later.
TenantVERIFY® has produced a “20 Point Checklist”, a very thorough process you should go through to check out your prospective tenant – you will need to register first, but the document is free to download here: www.tenantverify.co.uk/useful-documents.html
Here is a very brief guide on what you should be checking on:
Before you attempt to let your property, make sure you are aware of the letting regulations (read the appropriate articles here on the LandlordZONE® website) make sure the property meets the necessary safety requirements and that it is fully insured with a landlords’ policy.
Don’t be in too much of a hurry to sign up the first prospect that comes along, there is plenty of demand for rentals but you also need to be aware of the equality and discrimination laws.
Don’t be too squeamish about asking for personal information such as income and national insurance numbers etc., you are doing no more than a bank would do if they were lending money, which in effect is what you are doing when you transfer a legal right in your property to a tenant.
Using a professional tenant referencing company such as www.tenantverify.co.uk that does Right to Rent checks, credit checks, and landlord and employer referencing as part of the process is the only way to do this properly,
What you need to establish right from the start is that the tenant has a genuine reason for renting from you and has the wherewithal to pay the rent – does this prospect have the financial means and resources to pay the rent on time every single month? Is this a trustworthy enough prospect to be entrusted with your valuable investment?
Here are a few key checks that landlords should make:
- Proof of identity – you need to have sight of (original documents) a driving license or passport, including photo and address details, and take a copy for the right-to-rent check. The copies should be kept for 12 months after the tenancy ends. Make sure every adult occupant is checked in this way. Since February 2016 all landlords are required by law to conduct ‘Right to Rent’ checks to ensure tenants have a legal right to be living in the UK.
- Credit reference checks – A credit score from a reputable reference agency will cover a multitude of background financial data and will show-up any false or undeclared addresses, debt repayment arrangements or County Court Judgements.
- Proof of address – you need to see letters which show where the prospective tenant has been living, usually a utility bill, gas, electric or water, HMRC letter, Social Services correspondence etc.
- National insurance number – you need to take a national insurance number which proves that the prospective tenant is legitimately living and working in the UK.
- Employer’s reference – contact the employer (check out the firm on the internet first) by telephone (never a mobile phone) and get verbal and written references from a named and responsible person.
- Previous landlord’s reference – if there is a previous landlord or a letting agent who can verify the prospect’s behaviour in a previous tenancy this is very worthwhile, so use the same process as the employer’s reference. Ownership of the previous landlord’s property can be confirmed with an online Land Registry check.
- Bank statements – you can get a very good idea of the prospects’ ability to budget their spending and their income and financial commitments by asking to see the previous three months’ bank statements.
- Guarantor referencing – if you deem it necessary to have a guarantor in place, for those with a borderline affordability issue (rent should not normally be higher than one-third of the prospect’s income) or letting to a young person or student, the guarantor should be referenced in the same way as a tenant, checking home ownership with the Land Registry.
- Your own assessment – always interview your prospects, asking some pertinent and searching questions, answers to which should be matched to other information you have gathered and also matched for consistency. Question any anomalies and drill down further if necessary.
Finally, if you have any doubts at all, unless these can be satisfied later, don’t go ahead, you will almost certainly regret it.
If you are new to letting property, read this: www.tenantverify.co.uk/20_steps_to_successful_landlording.html©LandlordZONE® – legal content applies primarily to England and is not a definitive statement of the law, always seek professional advice.