Tenant Referencing: Why It Is So Important and What It Should Include
Your property is probably one of the most expensive things you own, so you don't want just any one moving in.
Referencing is the best way to protect yourself against bad tenants, ensuring that they are who they say they are, giving an insight into their ability to pay the agreed rent and their history of paying rent in the past, and ensuring that they conduct themselves in a good and proper way.
First and foremost, ensuring that the tenant is who they say they are is very important.
A tenant giving false details is obviously indicative of potential bad intentions.
It is also important to establish identity in order to ensure that the contract is enforceable.
A good reference should include both employer and landlord references (although these may not be available if you are renting to someone who is unemployed, or if the tenant has not previously rented).
The reference should include details of any bankruptcies or County Court Judgements (CCJ's) and previous credit history, which will indicate whether they have failed to pay bills in the past, and how well they manage their money.
Your reference check should include a confirmation of their employment status and current salary, which in turn enables you to identify whether they are able to afford the monthly rent.
A good tenant referencing report provides a clear indication of whether or not your potential tenant presents a risk to you, both in terms of their ability to pay the rent, and also their general previous behaviour as tenants, allowing you to let your property with confidence.
Additional information which you may request from tenants is 3 months bank statements, showing monthly incomings and outgoings, and also next of kin details which can help if you can't get in touch with your tenant directly.
If your tenant fails the credit check, it can be prudent to consider why, and how serious this actually is.
For example, if they have a CCJ or were declared bankrupt, they will automatically fail the credit check.
If the reason for this was that they were made redundant during the recession, but they have now had a full time job for three years and are easily able to cover the cost of their rent with their income, and have good references, perhaps it is worth considering allowing them as tenants, but with a guarantor.
A guarantor is a person who you, as the landlord, can ask to pay the rent if the tenant fails to do so.
It is important that the guarantor also passes a reference check.
Often a tenant with a poor credit history will offer to pay a number of month's rent in advance, or pay a larger deposit.
Although this is clearly a sign of good will, it can sometimes be better to ask them to pay the LAST month's rent in advance instead, and have this written in to the contract.
Unless otherwise stated in the contract, you cannot take money from the deposit to pay rental arrears.
If you do not feel comfortable with a tenant, their reference, or the option of a guarantor, you should not accept them as a tenant.
It is better to reject a tenant, and restart the process than leave yourself open to a potential bad tenant.
Referencing is the best way to protect yourself against bad tenants, ensuring that they are who they say they are, giving an insight into their ability to pay the agreed rent and their history of paying rent in the past, and ensuring that they conduct themselves in a good and proper way.
First and foremost, ensuring that the tenant is who they say they are is very important.
A tenant giving false details is obviously indicative of potential bad intentions.
It is also important to establish identity in order to ensure that the contract is enforceable.
A good reference should include both employer and landlord references (although these may not be available if you are renting to someone who is unemployed, or if the tenant has not previously rented).
The reference should include details of any bankruptcies or County Court Judgements (CCJ's) and previous credit history, which will indicate whether they have failed to pay bills in the past, and how well they manage their money.
Your reference check should include a confirmation of their employment status and current salary, which in turn enables you to identify whether they are able to afford the monthly rent.
A good tenant referencing report provides a clear indication of whether or not your potential tenant presents a risk to you, both in terms of their ability to pay the rent, and also their general previous behaviour as tenants, allowing you to let your property with confidence.
Additional information which you may request from tenants is 3 months bank statements, showing monthly incomings and outgoings, and also next of kin details which can help if you can't get in touch with your tenant directly.
If your tenant fails the credit check, it can be prudent to consider why, and how serious this actually is.
For example, if they have a CCJ or were declared bankrupt, they will automatically fail the credit check.
If the reason for this was that they were made redundant during the recession, but they have now had a full time job for three years and are easily able to cover the cost of their rent with their income, and have good references, perhaps it is worth considering allowing them as tenants, but with a guarantor.
A guarantor is a person who you, as the landlord, can ask to pay the rent if the tenant fails to do so.
It is important that the guarantor also passes a reference check.
Often a tenant with a poor credit history will offer to pay a number of month's rent in advance, or pay a larger deposit.
Although this is clearly a sign of good will, it can sometimes be better to ask them to pay the LAST month's rent in advance instead, and have this written in to the contract.
Unless otherwise stated in the contract, you cannot take money from the deposit to pay rental arrears.
If you do not feel comfortable with a tenant, their reference, or the option of a guarantor, you should not accept them as a tenant.
It is better to reject a tenant, and restart the process than leave yourself open to a potential bad tenant.
