Don’t skip the diligence checks on your potential tenants

If you are doing the tenant-finding part yourself by marketing your property on a website such as Gumtree, the one thing you should never do is skip on carrying out sufficient background checks on your tenants.

Most good agents will do this using a specialist referencing Company, and you can also administrate this process yourself.

If you are using an agent, always ask to see the results of any checks on tenants. Most referencing Companies issue a report or certificate after checks are made and you should see this before signing any tenancy agreement. Do not under any circumstances just take an agents word for it that the tenants have passed all checks. It’s your property after all.

We’ve met landlords before whose checks consisted of asking for a payslip or two. Some didn’t ask tenants for anything at all to substantiate their financial status or ability to pay the rent at all!

Remember it’s really not very difficult for a schemer to obtain a fraudulent payslip and there are numerous Companies advertising a ‘replacement document ‘ services on Google. Check for yourself.

Specialist referencing Companies often get in touch with the tenant’s employer and ask for their salary to be verified by the HR department. They also check the Company is real and exists.

They will also contact a previous employer if necessary, ask for payslips, a p60 or an accountants reference, contact their landlord or their previous landlord about rent payment history and whether the property was looked after and any damage caused, often obtain a character reference and also carry out a credit search on each tenant.

You wouldn’t want to rent your property to somebody who has a trail of debt behind them, is currently bankrupted, has a court eviction for debt, has continually paid rent late or has left a property with £1000 worth of damage and cleaning bills would you?

Sometimes potentially good tenants don’t quite meet the requirements of the referencing Company, however providing a guarantor can help especially if the guarantor is a parent or family and meets the referencing criteria. The referencing Company will carry out checks on the guarantor to safeguard you.

Reputable tenant referencing Companies include:

• Rent 4 sure

• Paragon FCC

• Maras

• Homelet

•Legal 4 Landlords

Perhaps the most important aspect of the work a specialist referencing Company carries out is that once the tenant passes the checks the agent can purchase a rent insurance policy.

A ‘rent insurance and legal expenses’ policy will pay your rent if your tenant doesn’t and will also provide a sum that’s used to instruct Solicitors to evict non-paying tenants from your property.

Don’t allow your agent to do absolutely everything for you, if it’s possible for you to have some involvement because some agents will place anyone in your property for their commissions.

And if it’s really not possible to meet your tenants before they move in, have a good chat on the phone at the very least. You need to feel good instinctively about the tenants about to live in ‘your’ property.

You want to make sure you like them, that communication is easy and that you feel you’ll get along, because this will help you build a better relationship and hopefully lead to a less problematic tenancy.

Next time...

In our next email we’ll talk about ‘bullet-proofing’ your property, because no landlord ever wants to be hit with seriously wealth damaging expenses, and the stress that goes with that.

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