Letting your property is not without risks. The vast majority of tenants are sound but as with many things in life, there are problems caused by a few. Unfortunately problem tenants can damage your property and harm your flow of rent.
Although there is no guaranteed solution to avoiding problem tenants, there are steps you can take when letting your property, to limit the risk of potential issues in the future.
Many landlords use their first impressions to help them avoid problem tenants. However regular problem tenants are aware of this and are experts at putting on a good show when meeting potential landlords for the first time. You’d be amazed at the number of tenants who approach us for properties, who are suddenly not interested when they realise we take references first.
Screening tenants thoroughly in the beginning is crucial. The following steps will help you to avoid problem tenants in the future.
1) Do take adequate references
Every prospective tenant should be required to complete a rental application. This should include details of their current landlord and preferably at least one previous landlord. If your applicant is a problem tenant, their current landlord could be tempted to give a good reference as they know this is the best way to get rid of them!
Ask for details of their employer. Contact them to verify your tenant works there and that the reported income on the application is correct. A good tip is to find their employer’s telephone number for yourself. We have heard of incidents where potential problem tenants have given the mobile number of a friend who is briefed to act as their employer!
Also look at their bank statements. The net income going into their account should match the income they declare. You should also see evidence that their current rent and utility bills are being paid.
2) Prove their identity
Get a copy of their passport or driving license. This proves the name on the application is the person you have met (problem tenants have been known to give false names). If the tenant is unable to produce either, they may be one to avoid.
Another important piece of information to obtain is their National Insurance number. This may be vital in the future if your tenant disappears and you want to trace them. This is usually shown on their payslip or on benefits documentation.
3) Check their credit history
You should always credit check every applicant and your application form should include a notice granting you permission to perform this check, which the tenant should sign.
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There are many companies offering credit checking facilities and it only costs around £8-£15. This check will show you if they have been blacklisted or if they have any CCJ’s recorded against their name. There can be genuine reasons why something is there (a previous divorce or redundancy is a common cause) but a failure to pay previous bills could also be a strong hint that they avoid financial commitments. If something shows up you need to dig deeper (or just decline to rent your property).
Not being shown on the Electoral Role is common among younger people or those who have moved frequently in recent years. If they are not on it, you need to seek other evidence that they are who they say they are.
4) Go visit them in their current home
One of the best tips we can give you for avoiding problem tenants is to go and visit them at home as part of your tenant vetting process. In this visit you will get a good insight into how they look after a property. It does not matter if it is untidy; but it should not be dirty or damaged. We have identified a number of bad tenants this way, which we would not have done if we had only met them in an office.
5) Be wary of cash payers
Tenants who offer to pay for rent up front for a large period (e.g. 6 months), may seem appealing but it could be a ploy to hide other issues. Two of the most common reasons for paying up front are that your new tenant wants to avoid being disturbed (a common approach used by future cannabis farmers) or that they have an awful payment history and have no intention of paying you rent beyond the upfront cash (yet they may try and remain in your property). Your tenant may have a genuine reason for paying cash up front – just take care.
6) Always have a well written tenancy agreement in place
You must have this signed by the tenant before keys to your property are handed over. Without this agreement you could be potentially “stuffed” should you have to take your bad tenant to court for any reason, as the law would favour your tenant.
It is always good to start with a short term such as 6 months. This is because it is easier to ask your tenant to leave at the end of the period if they prove to be a problem tenant after they have moved in. If you have given them 12 months or more in your agreement, you will have to follow a more formal, legal route. If your new tenant proves to be a good one, you can always extend the terms or go onto a “periodic tenancy” after that.
7) Make regular property inspections
You are entitled to perform routine inspections of your property and your tenant is obliged to allow this subject to adequate notice. It is extremely important that this is done regularly and especially in the first few months of tenancy. If you are using an agent, make sure you see copies of their inspection reports to prove they are being carried out. These inspections give you a good idea of how your tenants are treating your property and the sooner you pick up on any suspicious behaviour the better.
8) Maintain good relations
Try and develop a relationship of mutual respect with your tenant, right from the beginning. If repairs or maintenance is required on your property, listen to your tenant and respond quickly. Delays which seem unnecessary to your tenant (plumbing and electrical issues are the most common) can breed resentment. Your tenant may see their only recourse to getting things done is to withhold rent.
Tenants’ circumstances can always change in the future through no fault of their own. If they feel they can talk to you they are less likely to avoid you. You will also get to hear about potential financial difficulties for your tenant before they become a problem.
9) Keep accurate records
Keep a detailed account of all legal or financial transactions with your tenant, as well as formal (and informal) correspondence. Any agreements you make with your tenant should be confirmed in writing. It is important to keep a paper trail of any maintenance issues you have dealt with, as well as any warnings or requests you have issued. If you have future disputes which end up in court, this evidence is the best way of substantiating your case.
This all may seem a little onerous at first but adopting a thorough approach to vetting tenants will help you protect both your property and your income; by avoiding problem tenants in your property.
Although you may be concerned that an empty property harms your cashflow, you should take care not to rush and accept the first applicant. In your haste to avoid having two or three weeks without rent, you could create a problem in the future which could cost the equivalent of several months.
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