If you’re a new Landlord or you’ve owned and rented property for a while, it’s essential that you’re aware of the advantages and disadvantages of tenant referencing.
A tenant reference is a way of helping you to decide whether your prospective tenant is who they say they are, that they are able to pay the rent you are asking for, on time, and they are a reliable and trustworthy person.
If you ask a tenant personally for a reference, this cannot always be taken at face value. Computers and photocopiers mean that is very easy to fabricate a reference nowadays.
There are many ways to obtain a valid tenant reference, which can help you decide if the applicant is the right tenant for you.
Bank/building society referee
Ask your prospective tenant to provide you with the name of their bank or building society, the name of the manager, their account number and sort code and a contact number or address (or you could look this up yourself). This can help you to verify that you tenant is who they claiming to be.
Employer referee
Ask your prospective tenant to inform you of their place of employment, job title, department (if applicable) and contact information. Most employers will provide a reliable reference and it’s also useful to validate that the tenant is in employment and able to pay their rent.
Previous landlord referee
This can be the most useful and informative reference. Ask your tenant to provide you with their name, address and telephone number so you can speak to them in person. A pervious landlord can give you vital information with regards to how reliably they paid their rent and in what state they left the property when they moved out.
If your prospective tenant is reluctant to provide you with any of this information, there well may be a valid reason. However, there may well be a less savoury reason and this should be thought about carefully before you agree to let them your property.
Independent letting agent
If you use an agent to source reliable, trustworthy tenants, chances are they will undertake the referencing of potential renters on your behalf. Some agents outsource this to specialist referencing agencies.
Agencies use an income to rent ratio to determine whether a tenant is a good choice, usually based on 2:5, meaning that their gross salary must be at least 2.5 times the monthly rental outlay.
Look out for...
Evidence of county court judgements
Court decrees, bankruptcy or administration orders
Recurring breaks in employment
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