Tenant Referencing – Take Care!
A vital part of being a successful landlord is to get the right tenant. In fact if the truth be known, it is the most critical factor if you want a hassle free landlording life which all of us do. Part of this important part of the letting process is carrying out a thorough vetting and referencing of the tenant.
Don’t rely on you Letting Agent!
The first thing to remember is that don’t rely on your leting agent to do this property for you. Letting agents even good ones that I have used in the past will because of time and financial pressures still hoists an inappropriate (that means crap in middle class parlence) tenant on you.
What you must remember is that there are all sorts of automated referencing tests that referencing agencies use to give you a guide as to reject out of hand the tenant or to take things further. They should always be treated as a guide. For instance some excellent tenants could be rejected out of hand because they are young and do not have sufficient credit history, whilst serial scammers who are clever at hiding their bad debts and ramping their credit score can sail through. Having said that I would always get a basic credit check done if you are getting in your own tenants.
I’ve written before in details about vetting or referencing your tenants and this advice still applies. If you are looking for other equally useful advice then you could do worse than have a look at David Lawrenson a London based property investor and buy-to-let expert 5 essential steps to vetting your tenant.
Tenants under economic pressure
The reality is that many tenants are under tough financial pressures living a hand to mouth existence. We only have to look at the recent developments in the steel industry to see how quickly things can change in the economic fortunes for tenants and their landlords. This puts both under massive economic pressure.
Tenant referencing – our chosen providers
I would say that today more than ever, a landlord needs to make sure that the tenants you get are good ones and are fully referenced plus that they are in the type of sector of the economy where they are less likely to lose their jobs. Why? Well, if they lose their jobs they may struggle to pay the rent and / or have to move to less expensive rented accommodation – which is bad for them and whichever way you look at it, also means more hassle and expense for you the landlord.
In the worst case, it could also mean that they could stay put and just not pay any rent at all – meaning you have to seek repossession – and that process can take months, often with little chance of you ever recovering the money owed.
In the current environment, if I had to choose between equally good tenant candidates – one of whom worked in an economically shaky sector and another who worked in a slightly safer public sector job as a teacher or a civil servant, I know which one I would sooner go for.
Property Hawk tip – if you are taking a more risky tenant think about rental guarantee insurance
Landlords need to be tough
Yes, it’s tough on some – but hey I’m not the one who is responsible for the state the economy is supposedly in.
Also, if you use a letting agent, don’t fully trust them on this issue unless you have used them for a while and know they are reputable and can be trusted on this. Sadly, there are a few rogue letting agents out there who cut corners on tenant referencing and don’t do it properly.
Remember it will be you, not the agent, who is the one who loses out financially if the tenant turns bad. So landlords ask the agent to let you see references they obtained.
Don’t listen to all the guff some letting agents will give you about the Data Protection Act because your tenant should have authorised for you, the landlord, to see the references on the application form he filled in when applying to rent the property.
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