What Should Every Landlord Know About Tenant Referencing?
For landlords in the UK, the integrity and reliability of your tenants will determine the success of your property portfolio. A staggering £5 billion is lost in unpaid rent and property damage every year, leaving landlords out of pocket and with a difficult fight on their hands to claim compensation.
To reduce this likelihood, it pays to thoroughly scrutinise potential tenants before they move into your property. Although plenty of tenant referencing agencies have emerged in recent years, not all of them are as effective as they should be – the statistics show that landlords are still being seriously affected by arrears and repair costs.
Tenant referencing companies should provide the most comprehensive background checks on your behalf. Before utilising their services, landlords should ensure the following is provided.
A good place to start is with simple I.D verification. If dealing with foreign tenants, it’s actually required by law to check their residential status under the 2014 Immigration Act. If you are housing illegal immigrants, a fine of up to £3,000 can be imposed for each tenant.
Credit checks alone aren’t sufficient in testing the competence of a tenant. Despite being advertised as such by some referencing agencies, they’ll only trigger a warning if the individual has a county court judgement or other adverse payment defaults. Most tenants won’t be included in this category so, although a necessary part of the process, they aren’t fully reliable.
During the application process, prospective tenants must have all the required supporting documents to verify their submission. Ensure any paperwork is an original, authentic copy, hasn’t been tampered with and contains genuine photo I.D certification. Look for any further discrepancies within the documents, such as an inconsistent bank statement.
With the proper documentation at your disposal, you can find out the affordability prospects of the tenant. Verify their job title, employment status, salary and any other income before leasing out your property. So many landlords sacrifice this aspect of their referencing in favour of the immediate earnings. This will come back to haunt you if the tenant can’t keep up their rent in the long-term.
Previous Landlord Testimonial
A fantastic way to supplement the aforementioned checks is to simply enquire with the tenant’s previous landlord, if applicable. However, you should go further than the obvious “did they pay up on time” line of questioning. Ask of their general attitude and care towards the property, as well as their reliability and responsiveness to enquiries.
A bad tenant is simply a drain on your investment and is likely to lead to an infuriating, costly eviction process further down the line. As a landlord, it’s your responsibility to assess tenants as strenuously as possible, using a reputable referencing agency for full clarity.
During the interview stage, don’t be scared to ask in detail about the individual’s history, expected income and supporting documentation. Try and strike up a positive rapport with them, showing how you’re a reasonable landlord and will be on hand if any problems arise. This way, they’ll be less inclined to betray your good nature and disregard your property.
Now is a great time to get into the rental market or build your property portfolio. If you’re interested in learning more, check out our article on how property rentals are currently exceeding property sales.