How Landlords Can Avoid Bad Credit Risk Tenants
You are letting out a property - or several. You want to ensure your property to let is well looked after, with good tenants inhabiting it who are able (and willing) to pay their rent in full - and on time. But how can landlords go about ensuring they only let to the right kind of tenants? Moreover, what exactly is the right kind of tenant?
Tenant Credit Checking Service
There are several steps landlords can take to ensure their property is kept in good hands and the rental liability is fulfilled on time every month. Firstly, it is always a good idea to consider using a reputable tenant screening service such as ConsumerCheck.
Not only does our service give you access to thousands of credit files (in fact files on more or less every UK consumer), it provides an overview of a prospective tenant's financial status. This means landlords can successfully assess exactly how much of a financial risk is imposed by any individual looking to rent a property - and of course, good tenants won't hesitate to sign an agreement allowing their new landlord to access these details. Although there are fees incurred to use this online tenant screening facility, any cost is minimal when considering the potential financial pitfalls associated with renting property to tenants who are unlikely to pay their rent.
Any astute landlord will always request written or verbal references from their prospective tenants' previous landlord. Again, a good tenant will readily agree to this - and will be able to offer details of at least one (and preferably two) former landlords who can vouch for their good character. It is essential to check these details thoroughly and to contact former landlords as soon as possible - particularly prior to offering a formal tenancy agreement to any individual. All names of prospective tenants must be referenced in this way, even if you are considering letting a property to a couple. You never know, one such tenant might have had financial difficulties in the past and might have neglected their rental liability.
Of course, some tenants might be looking to rent your property as the first step towards independence and therefore may not have a previous landlord from whom you can obtain a reference. This is a common scenario with students seeking students accommodation and other young people who aspire to independence from parents yet haven't had the opportunity to prove their financial responsibility.
With a younger person or student where a reference cannot provide sufficient confidence, it is advisable to request a parental guarantee or a named guarantor. This can be in the form of a signed formal agreement which requests contact details for the named guarantor and includes a clause stating that, should the tenant fail to maintain their rental payments, you as the landlord are able to request financial recompense directly from the named party. Not only is this a fair method of allowing younger tenants access to independence, it is a secure method of ensuring you will not lose out as a result of defaulted rental payments.
It can also be considered prudent to obtain employment details relating to any prospective tenants. Prior to agreeing to let a property, a savvy landlord will ensure they are aware of the current financial status of their tenants, acquiring information relating to the individual's current workplace and salary. You are well within your rights to request this information and a good tenant will not hesitate to pass on details relating to their employer. Not only does this prove the accuracy of the information your tenant has given to you, it allows you to gain an insight into their current income and landlords can then ascertain whether the tenant in question will struggle to make rental payments.
If you are considering letting a property to a tenant who is in receipt of Housing Benefit, don't be afraid to request any benefit payments are made directly to you, the landlord. Local Authorities have a duty to act on requests made by Claimants and, if a tenant is unsure as to whether they can manage their finances, it is much more fair for both them - and you - that their Housing Benefit is paid direct to their landlord or agent. Keep in mind, however, that housing benefit payments are always paid in arrears, usually four weekly - although Housing Benefit is a reliable income and payments are invariably made on schedule.
For landlords these approaches to letting property along with ways to check and screen tenants should reduce the chances of unpaid rent or a high credit risk tenant that may eventually require eviction.