Checking the immigration status of tenants
Article Posted - 18th November 2013
Before you sign a tenancy agreement, make sure you carry out a reference check of the prospective tenant to help reduce the risk of taking on a problem tenant. Vetting your tenants at this stage demonstrates your professionalism and may well become a requirement under new plans by the Government.
Landlords can reduce the risks of bad tenants and unpaid rents by seeking references from former landlords and employers, and by obtaining detailed credit reports on prospective tenants. These are usually paid for by the tenant, and may be reimbursed if they take the property.
Carrying out checks could soon become obligatory; following the Government's crackdown on illegal immigration, checking the immigration status of new tenants is likely to become mandatory, with fines of up to £3,000 for landlords who provide accommodation to illegal immigrants from outside the European Economic Area without making the correct checks.
These rules could become law by March 2014, although the NLA anticipates that January 2015 is a more realistic deadline.
New requirements for landlords
The NLA is currently working with the Government on the best way to implement the proposal, which the Association believes recognises the important function performed by the private-rented sector in Britain today. To get involved in our efforts to influence the decision makers, why not send a copy of the NLA's letter to your local MP via our automated email system.
Under the proposals, before renting accommodation to anyone to live in as their main or only home, landlords will have to ask prospective tenants to produce evidence of their permission to be in the UK – the types of documents that would be considered acceptable evidence are still being decided. Landlords will check this evidence and are expected to keep a copy for their records. If a person cannot produce satisfactory evidence, the landlord should not let their property to them.
In its response to the Home Office's consultation, the NLA states that it is imperative that practical advice is provided in a simple and easily accessible format which landlords and prospective tenants can use to ensure compliance. The submission also explains that landlords often interview tenants outside of an office set up with photocopiers and scanners.
The proposals will involve landlords taking reasonable steps, before the rental arrangement starts, to find out who is actually going to be living in the accommodation rather than only inquiring about the person who pays the rent or signs the tenancy agreement.
The Government has also proposed that checks would need to be periodic and repeated in the case of those tenants who have limited leave to remain in the country. Clearly the NLA has objected to periodic and on-going checks in strong terms as this should remain the responsibility of the appropriate authorities.
Initial immigration checks are likely to be incorporated into landlords' existing referencing procedures with relatively little difficulty. The NLA expects that referencing firms will expand their product range to include immigration checking.
Carrying out tenant checks
Carrying out reference checks, either on your own or using a referencing firm, has long been best practice for landlords. The objective is to establish a prospective tenant's standing and creditworthiness and to assess whether a tenant will be able to afford the rent throughout the duration of the tenancy.
Before you carry out a tenant check, you will need to have the tenant's explicit written consent. In the majority of cases where an individual does not consent to a pre-tenancy check or is not willing to provide sufficient information for a pre-tenancy check, alarm bells should start ringing in your head and you should consider seriously whether you want to let your property to this person.
As a minimum, it is strongly advisable to ask for written references from a current employer or accountant, copies of recent bank statements as well as two pieces of identification of which at least one should be photo identification such as a driving licence or passport.
Specialist tenant referencing companies offer a variety of tenant vetting services to check a tenant's credit history, creditworthiness, and reliability as a tenant. The NLA Tenant Check online service allows landlords to choose between basic, full, express and company tenant checks. While the basic check covers County Court Judgments, insolvency information, identity verification checks, name searches and confirmation of residence and linked addresses, a full tenant check also includes references from the tenant's employer (including income confirmation), references from the previous landlord (or letting agent), and confirmation of bank account details.
In circumstances where it is difficult to obtain a reference or where a tenant may have difficulty meeting the rent, a landlord may seek a guarantor. The guarantor is usually then referenced the same way.
Finally, landlords using a lettings agent to find and vet new tenants should remind the agent to be as careful as you would be about who is allowed into your property!
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