IDENTITY THEFT – D.Lawrenson

As the incidence of credit and ID fraud increases, so landlords have had to collect more and more information on tenants to ensure that they don’t get the tenant from hell.

Only by using a proper referencing system can they be sure that the person standing in front us who wants to rent a house, is really who they say they are and can afford to pay the rent with no hassles.

In my experience most tenant applicants understand this and are happy to provide the information we need to do our credit and reference checks.

In fact, I only had one potential tenant who objected to providing previous utility bills such as proof of past address. Needless to say, I didn’t let to her! A thorough tenants’ referencing system will deter tenants with a history of not paying their rent and also potential ID fraudsters who will seek an easier, “greener” landlord elsewhere. But there are laws about what landlords can and can’t do with the information we collect and landlords who abuse the data they hold on tenants can get themselves in trouble.
Fortunately the Information Commissioner (formerly the Data Protection Registrar) sets out some guidance for landlords that explains what landlords can and cannot do with tenant data.

The Information Commissioners says if you use an agent to find a tenant and they obtain references for you, you are entitled to see the references as long as your agent makes it clear to the tenant on the tenant application form or in writing that this will happen. If the agent says he can’t change his application form or get the tenants’ consent to this, I’d suggest you go to a more amenable agent.

If you do the referencing yourself, you should always tell tenants what you will do with the information they give you and what credit checks and searches of databases you will do – the key thing is to be clear about how you will use information and not to use information for any purpose that is unreasonable.

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Which third parties can you give information to?

Suppose you let out a shared house to say two or more tenants in which each tenant is “jointly and severally” liable to pay the whole rent – i.e. they do not each have individual agreements. In this case, if one doesn’t pay, you can seek to recover the balance owing from any one of the other tenants (or their guarantors) if they have them. In these circumstances you would, by implication, be revealing that there was a shortfall in the rent receipts due because one or more tenants have not paid their “share.” As they are all party to a legal contract, you are perfectly within your rights to do this.

Other third parties who can be given the tenant details would include debt collection agencies or tracing agents who will need information on money owing to do their job. The Information Commissioner advises landlords to make it clear in the tenancy agreement that this could happen in the event that the tenant leaves with money owing. Landlords should not give previous tenants’ new address to new occupiers unless the old tenants have requested this happen in writing.

David Lawrenson is the author of Successful Property Letting – How to Make Money in Buy to Let the UK’s top selling buy to let book and runs a property investment seminar and consultancy company at www.lettingfocus.com.
He provides unbiased buy to let and property investment advice to companies and individuals and is also well known as an expert property speaker and freelance property writer.

Copyright David Lawrenson 2007