Be sure to get the right tenant for your property
Be sure to get the right tenant for your property
In recent months, much focus has been placed on the plight of tenants when it comes to renting a property and the contents of tenancy agreements. However, landlords often lose out too.
To avoid problems with your tenants, it’s vitally important to carry out preliminary checks on potential tenants. This will confirm a tenant’s identify and ensure that their income is sufficient to be able to meet their rent payments. Carrying out a credit history check will also inform you if the tenant has had previous financial difficulties.
It is far better to avoid problems from the off than to let someone who is likely to struggle with payments. But circumstances often change so if a tenant is struggling with their rent, it’s worth arranging a short-term repayment plan or reduced rent agreement for the short-term. This will help avoid long-term problems. After all, you don’t want to have to evict tenants (unless you’ve exhausted all options) or lose out on rent completely during void periods. A recent report by the NLA stated, on average, it takes four months and £900 to end a tenancy. The £900 covers only the court and legal fees and excludes the loss of potential rental income.
Prevention better then cure
It isn’t easy to establish a tenant’s ability to pay the rent but employing the service of professional tenant checking service will help you avoid many of the pitfalls caused by problem tenants. This is an essential part of agreeing to let a property because it provides indicators as to the tenant’s ability to keep up with their rental payments.
NLA Tenant Check offers two options to landlords who are looking to reduce the risks involved with tenant selection – the Basic Tenant Check and the Full Tenant Check.
The Basic Check is a credit history check which includes details of any County Court Judgment (CCJ), Bankruptcy and Insolvency data. It will also confirm if the applicant is known at the addresses they provide and look for any alias names or undisclosed addresses.
The Full Tenant Check includes all elements of the Basic Check as well as additional references from the applicant’s employer/accountant and previous landlord. The check also confirms their income level, residential status and bank account details and provides an affordability calculation to determine the tenants’ ability to pay the rent.
Be aware that not all tenants are keen to be referenced
Most people understand why it is necessary to carry out pre-tenancy screening and will gladly provide the necessary details and information to demonstrate their suitability. But if your potential tenant has not had a background check conducted for renting before, they may not be keen to disclose certain details. In these cases, most people are happy with the process once it has been explained. In cases where the potential tenant is reluctant to partake in the referencing process once you have explained, it may be wise to view this as a warning signal and consider moving on to the next applicant. It is far better to spend an extra week or two to find a more suitable tenant than to spend several months removing an unsuitable tenant from your property.
Rise in fraud cases
NLA Tenant Check has recently reported an increase in the number of applications that are found to contain false or misleading information provided by potential tenants in order to hinder background checks.
During the first half of 2012 NLA Tenant Check received over 70 false income claims or fake employments. These cases include applicants who turned out to work for non-existent companies or closed down shops, others had recently left their employment but were able to furnish the landlord with their latest payslips and many more provided exaggerated salary packages!
It is particularly important to check self-employed applicants thoroughly to avoid fraud. Our experience to date has found that approximately 1 in 5 self-employed tenants are unable to prove their income with an accountant reference or their official tax return. So don’t leave it another day – safeguard your investment.
When letting your properties to students it is always advisable to obtain a suitable guarantor as students usually have a limited income and may struggle to meet the rent payments. There is also a higher than average risk of damage to your property and you can include responsibility for this in your guarantor agreement.
That said, an agreement signed by a guarantor who has an unstable income or a poor credit profile of their own is of little use so it is equally important to carry out checks on any potential guarantor. A suitable guarantor will have sufficient income, a clear credit history, be confirmed at their address and ideally, own their property. NLA tenant Check is also able to carry out checks on guarantors to ensure they are well placed to undertake the commitment.