Over the last few years we have seen a rise in the demand for private rented accommodation. Obviously this is great news for landlords as having tenants in their properties means they can benefit from steady, on-going income. Although there may be a lot of interest in your property, it is essential to choose the right tenant. In this article we will explain the importance of tenant referencing when renting out properties.
What is a Tenant Reference?Tenant references are designed to help landlords and letting agents make a more informed decision on whether or not an individual will make a suitable tenant for their property. Tenant referencing involves checking whether an individual has an adverse credit history (unresolved bankruptcy, IVA etc.) and whether or not they have ever missed payments on previous rental properties. Landlords may carry out the referencing process by getting in touch with an individual's employer, previous landlord or letting agency. Many landlords outsource tenant referencing to third party companies for convenience.
Tenant VettingChecking references can help landlords when it comes to the process of tenant vetting. By vetting the tenants, landlords will stand a better chance of selecting low risk individuals to move into their properties. Tenant vetting also involves checking that individuals have not breached previous tenancy agreements. If they have, then it is unlikely that you will want to form an agreement with them, as history could repeat itself.
By checking references you can also vet a potential tenant's financial situation. You need to make sure that they are going to be able to meet the monthly rent payments you require. Most letting agents recommend that an individual's gross salary works out to be more than two and a half times their share of rent. During the process you will also want to check that potential tenants are not still in arrears on previous tenancy agreements.
Finally, you will need to vet your tenants' personalities. If they have participated in anti-social behaviour or caused problems in their previous landlord's property, it will show up on their tenancy reference. You do not want to put yourself at risk of having damage done to your property, so make sure that your potential tenants have a clean record.
Better Safe Than SorryWhilst references are a great way to mittigate risk and ensure that potential tenants are the sort of people you want living in your property, legal expense and rent guarantee insurance provides a backstop in the unlikey event of a problem. Sometimes you may find that your tenant's circumstances change during their time in your property, which may lead them to being unable to pay their rent. Aside from losing out on monthly income, you may also have to consider the legal expense of evicting your tenant. Taking out a legal expense and rent guarantee insurance policy will free you from the worry of problem tenants. Not only will the policy help cover missed payments but it will also help cover any legal expense incurred, putting you in a better position to pursue legal proceedings.
We listened to your feedback and we now offer a pay-as-you-go reference option. You can purchase credits on-line and we do all of the hard work for you. We peform an identity check and send you an email containing a link to a dedicated application status page. Clicking on the link gives you an up to the minute update on the progress of your application. Once complete, we then email your reference as soon as it's complete.