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The only time that you
are totally in the driving seat with regard to your tenants is before
you've rented the property to them.
Once they've moved in, your
options for dealing with any problems become much more limited,
time-consuming and expensive.
It's therefore crucial that you do all you
can to avoid potential nightmare tenants, and seek out some perfect tenants instead, at this
early stage.
Just follow these three easy steps:
1) Assume nothing, check
everything
To find the perfect
tenants for your property you need to stack the odds in your favour.
The only way you can realistically do this is by thoroughly
credit-checking and referencing them.
Here's a list of some of the
things you need to check:
-
Voters' Roll.
-
Public information
check for CCJ's, bankruptcy and Voluntary Arrangements.
-
Proof of identity
(photo id such as a passport or driving licence).
-
Proof of current
address (recent utility bill or financial statement).
-
Last three months'
bank statements (is their account being managed properly, or is it
permanently overdrawn?).
-
Last three months'
wage slips (for proof of income).
-
Employer's
reference (full or part-time, length of time employed).
-
Accountant's
reference if self-employed.
-
Last landlord's
reference (establish whether there were payment issues or if any
dilapidation was recorded).
-
If possible, a last
but one landlord's reference (their last landlord may give the
tenants a good reference just to get rid of them, so if possible try
to speak to their last but one landlord - a quick telephone call will
tell you all you need to know.)
It may seem like a lot
of things to check, and you may be tempted not to bother because your
tenant applicants seem like respectable professionals, but you must
resist this temptation!
Unless you have personally known the tenants for some time, assume nothing and check everything.
To not do so is
the surest route to buy-to-let disaster (along with not paying your
mortgage).
2) If in doubt, consider a
guarantor
If you have any doubts
at all about your tenant applicants, but you would still like to
proceed with them for some reason, you should ask them to provide a
guarantor.
The guarantor will underwrite the tenants' obligations to
pay the rent, make good any damage, settle outstanding bills, etc.
Always get a guarantor
if your tenants:
-
Have no previous
rental history.
-
Are less than 30
years old.
-
Have less than 18
months' employment history.
-
Haven't worked for
their current employers for more than six months.
-
Are self-employed
but have less than three years' satisfactory accounts.
-
Have been working
abroad in the previous 6 months.
-
Earn less than
three times the annual rent.
-
Are employed in an
occupation which is considered changeable.
-
Are students or on
housing benefit (LHA).
-
Have low (or no)
credit scores.
You should of course
credit-check and reference any guarantor the same as you would your
tenants.
For complete peace of mind, you might also want to consider
taking out rent guarantee and legal expenses insurance.
3) Trust your instincts
Only when you have
completed all your credit checks and references, and if necessary obtained a
guarantor, should you think about judging your tenant applicants on
your intuition and instincts.
They may have passed all the checks
with flying colours, but do you feel you can trust them? Have they
been pleasant and straightforward to deal with?
If you have any
reservations at this stage, it may be better to cut your losses and
move on.
Another week or two spent looking for decent tenants is
infinitely better and less costly than dealing with nightmare tenants at a later date.
Of course there are no guarantees that you won't have a problem with your tenants at some point in the future, but by following these steps you should eliminate 95% of the issues that so many landlords have to deal with.
You'll also be giving yourself the best chance of finding those perfect tenants.
In addition you should make sure that you have a properly drafted tenancy agreement drawn up.
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