Rogue tenants can cause a lot of grief, from unpaid rent to £1000’s in damages. It’s best practices then, before you let someone rent out your property to ensure, to the best possible ability that they are going to be good tenants.
How though, do you determine who is going to pay rent on time? Who is going to look after the property and treat it respectfully, or who is going to dodge rent payments and take 6 months to evict?
There are two key mistakes that landlords make.
- They eagerly accept the first tenant that comes along in a desire to minimize vacancies as much as possible.
- They don’t bother to properly reference their prospective tenants.
In this article, we are going to outline some of the key steps every landlord should take when referencing their tenants to avoid nightmare rental scenarios.
1. Set Rigid Standards
Before you set about finding, interviewing for referencing your tenants you need to know the standards you are going to hold them to.
Can they actually afford the rent? We generally suggest they should be earning 3x times the monthly rent.
Are they employed full-time? How long have they been at that job? You want to determine whether they seem like they have a stable income.
- References from past landlords
Do their previous landlords have glowing reviews, or have they left in their wake a trail of smoking destruction like a Mongol horde?
- Pets and smoking.
Outline your smoking, pet policy, and any other specific disqualifiers upfront in your listing to help avoid time wasters.
Setting these rigid standards will help you choose between multiple tenants if you get more than one application as well as determine who if anyone is going to be a good fit for your rental.
The key thing you need to determine from these standards, is can they and will they pay rent on time and in full?
2. Meet Them in Person
Always meet your tenants. Unless you’re completely comfortable renting to them after meeting them don’t try to convince yourself they’ll result in being good tenants. Sometimes all it takes is that gut instinct. Of course, we’re not testing Yakult, your gut may be wrong, but it’s a good place to start.
Ultimately, you are trying to gauge whether this person appears trustworthy, mature, and reliable.
3. Check Their I.D.
Before you even start the process of deciding whether someone is a potential tenant or not, make sure they’re actually who they say they are, and that they have the right to rent in England.
Due to landlord legislation, Under section 22 of the Immigration Act 2014, Landlords in England are obligated to check their tenant’s proof of ID and citizenship to help control illegal immigration.
Failing to comply could result in penalties of up to £3,000.
4. Tenancy Application Form
Get interested tenants to fill out a tenant application form. It could be worth having printouts at the viewing otherwise send it to them in an email that same day and have them fill it out and return it to you.
- Tenancy details: property address, rental period, number of applicants, proposed tenancy start date.
- Tenant’s personal details: tenant’s name, contact details, and time at the current address.
- Current Landlord: details about the current landlord.
- Referee / Guarantor Details: details about guarantor
- Employment details: current and past employment details, and details regarding salary
- Details about occupiers: details about all the people that will occupy the property
- Other details: details such as smoking status, pet status
The form is useful because it formally provides you with details of their employment, previous/current landlords, and a referee. This means you can go away and start following up on their references to make sure they are who they say they are, have a good track record and their application is legitimate.
Plus if you do, as you hopefully will, receive more than one application you can compare them all side by side to determine which applicant suits your rental best. For example, you can easily see which applicant has a greater salary and better rental history.
5. Use a Tenant Referencing Service
It’s always a good idea to get everything checked over by a tenant referencing service. These services have traditionally been a little costly, however, Open Rents service is pretty affordable, offering a comprehensive tenant referencing service for just £20.
- 3-5 Working Days;
- Credit Check;
- Linked Address, Identity & Fraud Information;
- CCJs, Decrees, and other court information;
- Right to Rent Check and Advice;
- Affordability Rating;
- Previous Landlord Reference;
- Employers Reference;
- Rent Guarantee Insurance Eligible.
We suggest treating a 3rd party tenant referencing services as a contributing factor to help determine the overall suitability of your prospective tenant. You should always do your own due diligence!
Get a comprehensive tenant referencing a report from £49 or choose one of their lettings and rent management plans with tenant referencing included.
6. Corroborate Their Story
Sadly, not every tenant is honest, in fact, they are notorious for supplying duff information on their applications. Often though, you can find out if they are telling you porky pies by doing a quick online search. It’s worth Googling them and having a quick peruse of their social media profiles.
Google, Facebook, and LinkedIn.
For example, they might have said they are non-smoker on their application, however, their profile picture shows them holding a cigarette. Or maybe they claimed they worked as a Junior finance officer for HSBC, but there’s no evidence of that on their LinkedIn profile, and their education shows they have a degree in Media Studies.
If, even after discovering holes in their story you still think they will be good tenants, then talk to them about it. They might have a perfectly reasonable explanation.
7. Tenant Guarantor
Getting a guarantor is an increasingly popular option for landlords especially when renting to students or people with short rental histories. It essentially means a second person will assume responsibility for the rent should the tenant not be able to or is unwilling to.
Other Points to Consider
1. You can’t pass on referencing costs to tenants!
On 1st June 2019, the “Tenant Fees Act 2019” came into force, which is a legislation that focuses on banning and restricting letting agents and private landlords (in England only) from charging tenants with certain fees, which includes referencing fees and credit check fees. so probably only reference the most likely to succeed in their application.
2. Keep looking for tenants until the deal is signed
Even if you think you’ve found the perfect tenant(s), don’t burn your bridges with your other applicants or even stop the process of looking for new tenants until the lease has been signed, and the first months’ rent and the deposit are paid.
Many landlords make the mistake of trusting the enthusiasm of applicants, and take their verbal commitment to the tenancy as a bond. The reality is, consequences change, and many applicants show enthusiasm and interest so you reserve the property for them while they’re simultaneously looking at other prospects!
3. Rent Guarantors Insurance
RGI has become extremely popular among landlords over the last few years, particularly because of the tough economic climate, which is causing spikes in rent arrears.
If you don’t know what it is, it’s essentially an insurance policy that covers landlords against loss of rent in the event of non-paying tenants.
If you plan on getting Rent Guarantors Insurance, one thing to be wary of is that RGI companies will have specific requirements before they will offer you coverage. For example, they may require you to run specific checks, or use specific referencing services.
You can stay on top of new laws, regulations, and best practices as well as get helpful and insightful advice from the community by joining a landlord association.
We hope you found this blog interesting! However, do note that it should not be used as a substitute for competent legal and/or other advice from a licensed professional.