As a landlord, your main priority is to get tenants that will make rent payments on time. However, before you can confirm that the potential tenants interested in your property will be able to afford the rent every month, you will need to run some tenancy reference checks.
Before you start with the checks, it’s important to ensure you know how to vet your tenants. This is what we call tenant reference checks.
What is a tenant reference check?
Tenant reference checks is a way of verifying whether your potential tenant can afford to pay rent on time. Throughout the vetting process you will carry out checks to ensure the potential tenant has enough income, is a legal resident in the UK and has a history of making payments on time.
How can you know if a tenant is financially ready to rent a whole apartment? Do they make enough money to cover the rent and still have something left over at the end of the month? These are the questions you will be looking to answer as part of the financial readiness checks you will carry out for each tenant.
You can also check the financial readiness of your tenants by doing the following checks:
Check proof of employment
You can check that that your potential tenant is employed full time by requesting employment reference letters, contract letters or payslips. Most employment checks request for the payslips of the last 3 months.
Check bank statements
Pay special attention to the money coming into the account and ensure that the employer’s name mentioned in the reference letter corresponds with the one on the bank statement. When someone is self-employed it is even more important to check their bank statement to ensure that they have a regular income. Most landlords request for a bank statement of the last 3 to 6 months.
Check their credit score
You can carry out a credit check to ensure that there are no late payments or CCJ’s in the historical record of your potential tenant. If you have found that your tenant has a bad credit history, but their financial statements prove they make enough money – then you might need to get a guarantor involved.
What is a guarantor?
A guarantor is someone who will stand in the place of your tenant and make rent payments on the tenants’ behalf.
Guarantors will also go through the following checks to ensure that they can afford rent payments in cases where your tenant can’t.
- Credit check
- Bank statements
- Recent payslips
If your tenant is unable to get a guarantor, you can request that they pay a larger deposit. This means that if your tenant is ever late on their payment you can use the deposit to cover their rent.
Legal right to live in the UK
Before you can rent out your property to a tenant, you need to check that they have a legal right to live in the UK. If your tenant is found to be illegally residing in the UK, as their landlord you could be fined £3,000. Before your potential tenant is given a place to live – check that they have a valid British passport or visa.
Landlord rent history
Before renting out to your potential tenant, you should check through their renting history. Ask them to provide the details of letting agency/ landlord details for the last place they rented from.
You can ask the following questions:
- Did the tenant pay rent on time?
- Did the tenant leave the property in the same condition as it was originally?
- Did the tenant ever cause disruption to neighbours?
Note: If a tenant is unwilling to give information about their landlord rent history, then this could be a sign that something isn’t right. At this point, it may be best to decide against renting to them. Remember having the right tenant is important for your peace of mind. If something isn’t right – there is a reason for that.
When to use a tenant referencing service
As a landlord, you want to ensure that your tenants are thoroughly vetted to ensure that the tenants are who they say they are. For example, you will want to learn whether your tenant has a pet, will have friends staying with them. You can find out about all of this and more when you run a thorough background check with a professional tenant referencing agency.
Although these background checks are not free, they are the best way to get a wholesome picture of your tenant.
Looking for a letting agency to vet a potential tenant? Our letting agency specialises in matching tenants to the right property. We also carry out an in-depth tenant referencing check as part of our tenant onboarding process. We can give you peace of mind as you rent your property.
Contact us today for more information.