“I should have known better, I should have guessed” – common phrases among landlords when they start to experience problems with their tenants.
But 99% of the time, these problems, or even these tenants, could have been avoided by following a strict referencing process.
It’s not a case of going all ‘big brother’, but ensuring that both the tenant and the landlord enjoy a stress-free, transparent and happy tenancy.
While your heart might tell you to bend the rules on occasion for someone – maybe they have a pet but promise to find it a new home soon, or perhaps they claim to be starting a new job next week and can’t afford the whole deposit – you should really go with your head. After all, you need to remember that this is your business.
Here are four crucial checks that we recommend every landlord should make during the tenant referencing process.
Passport: You must always ask to see a prospective tenant’s passport and take a copy. This will not only prove they are who they say they are, but also confirm whether they have the right to work in the UK.
With new legislation due to come into force later this year that could see landlords fined for privately renting to illegal immigrants, this is more important than ever.
A drivers’ license can be accepted for UK residents who do not have a passport.
Proof of address: Get a copy of a letter or bill sent to the tenant’s previous address to prove that is where they lived.
Obviously you want your tenant to have a job or they won’t have an income to pay the rent. You should seek to get a letter from the employer confirming their job, salary and whether they are a permanent or contracted member of staff.
If the tenant is self-employed, a letter from the accountant will suffice.
BONUS TIP: An employers’ letter does not count as proof of the right to work. You cannot assume that the employer has made the relevant checks.
3. Money management
Some landlords, especially new ones, find this task somewhat invasive. But obtaining three months’ worth of bank statements has to be done. It can tell you a lot about a person and whether they are able to effectively manage their money and pay their rent.
You’ll be able to find out if their salary is what they’ve said it is, what their spending habits are like and how responsible they are financially. If tenants refuse to show them, it’s normally a tell-tale sign that they have something to hide!
The recent changes to the mortgage application process highlight how important this is.
If your tenant has rented before, then it’s vital you obtain a reference from at least one landlord, if not two. The best way to approach this is verbally – you’ll be more likely to get the truth and it’s quicker for you and the other landlord. You should ask why the tenant left, whether they left off their own accord, if they paid their rent on time and would the landlord rent to them again?
Talking directly to a landlord also gives you the chance to drop in a bonus question like “off the record, is there anything else I should know?”
BONUS TIP: In the event that this is the tenant’s first time renting, then you could ask for a personal reference. The downside to this is that nobody is going to ask someone for a reference who is likely to say they are nasty little toe rags! It just shows they have a friend.
If you’re a new landlord or feel worried about carrying out the correct referencing yourself, then it may be worth seeking advice from a tenancy specialist. There are also paid-for services available for comprehensive tenant referencing.
Of course, detailed referencing is not future proof and problems may still arise – problems that may be out of your control or the tenants’. In one of our upcoming blogs, we’ll give you some more top tips on how to manage problems with tenants.
What lessons have you learnt as a landlord during tenant referencing? Or are you a tenant? What do you find most frustrating with the process?