Tenant referencing – a quick guide for landlords
When you’re letting property, it’s important to understand the fees you pay and what you get for your money. While all landlords want the best possible return on their investment, tenant referencing is not an area where you can afford to cut corners. If you find yourself saddled with a tenant who can’t pay the rent, or one who doesn’t have the right to be in the country, the financial consequences will far outweigh the cost of referencing.
In this blog, I look at just what’s involved in tenant referencing, and the consequences of not carrying out proper checks.
- Right to live in the UK
It is important the you only rent to people who have the right to live in the UK. If you let to someone who is not a British citizen, your estate agent will check the prospective tenant’s immigration status to make sure they’re allowed to live here. Your estate agent will need to see proof, usually the tenant’s non-UK passport showing they have permission to live in the UK indefinitely.
It is illegal to rent to someone who does not have the right to live in the UK and the penalty is a hefty fine of roughly £3,000. Compare this with the cost of tenant referencing – you’ll see that trying to do the checks yourself or not doing them at all is false economy.
- Financial checks
You can only let your property to someone who can afford the rent. Estate agents judge affordability for tenants by looking at income, which should be 2.5 times the rent. Many people dislike talking about money, so even if you’re planning to rent to a friend, this kind of financial check is far more easily done by an estate agent.
The consequences of not doing financial checks, or ignoring the results, is that you may let to someone who can’t afford your property. This can lead to unpaid rent and even eviction, all of which is a costly hassle.
- References from previous landlords
Before you rent to someone, you need to know that your property will be treated with respect, and the rent paid on time. Your estate agent will ask previous landlords about your prospective tenants to find this out.
Your tenant will have to put down a deposit which should cover the cost of any repairs that are required when they move out, but there is a limit. It’s also important to consider the time taken to restore the property at the end of the tenancy – you want to be able to remarket the property as quickly as possible after it becomes vacant so you don’t miss out on rent.
Tenant referencing is an important part of the lettings process. It should always be done correctly and with due diligence, protecting landlords, estate agents and tenants from poor judgements and serious consequences.
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To find out more about Dockleys lettings services, contact me, Adam Dockley, on 020 3633 4440.