Contrary to popular belief, being a landlord does not come cheap. When you rent the property out for the first time, there are certificates and checks to be done, not to mention insurances. It is often tempting to try and save money by missing out some parts of the process. Tenants often seem genuine and trustworthy and so, in these tough economic times, it is often tempting to avoid running references on them. This is particularly the case with landlords who are not using an agent. Agents often run tenancy checks, which the tenant pays for, but for private landlords who choose not to pay an agency for managing their property, or finding tenants initially, saving costs and time by referencing tenants can be false economy.
Checking the potential tenants track record
But this can be a costly mistake- references are designed to check not only the individual’s previous record with other landlords, but their financial status. References can check things like bankruptcy, CCJs and other financial misdemeanours. They can also help to cross check a person’s identity. In 2012, 59 percent of landlords discovered that they had inadvertently rented their properties out to tenants who did not pay their rent. It is unlikely that all of these 59 percent were first time offenders, a fact that might have been picked out on a reference check. It is no surprise in this climate that evictions are up 8 percent from 2011-2012- a survey in late 2012 reported that 99,000 tenants had not paid their rent for two months or more.
Tenant referencing confirms a tenants employment details
A thorough referencing process can help to flag up potential tenants who might not pay. Along with checking a tenant’s financial record, they also check the employment references that a tenant has provided. It might come as a surprise to find out that your high-flying, £60,000 a year solicitor is actually a £14,000 a year earner and has been over-ambitious in the rent that they have set themselves up to pay.
Tenants referencing can prevent fraudulent applications
Tenant referencing can also flag up fraud checks, to make sure that the person that you believe you are renting to are who they say they are. This is particularly the case if there turns out to be a problem later on- some landlords have rented their properties out, only to discover that they property has been used for criminal activity. It was reported in 2012 that police in England and Wales had around 20 reports a day of properties being used as cannabis farms, for example. The details of the occupants have then turned out to be false. Before the referencing process, landlords and letting agents can be alert to this problem by checking identity documents, such as a passport or birth certificate.
It’s not personal! Don’t be tempted to skip the reference because they seem genuine!
It might be tempting to avoid paying for a tenant reference check- sometimes tenants seem genuine and the landlord wishes to sign them up to their property, to get some revenue in or perhaps because they seem like good tenants. But this can be an expensive and devastating mistake; early checks before the tenant moves in can help to avoid bigger costs and heartache if things go wrong.
Remember the best con artists DO come across very well, as they make a career out of deceiving people – so whether they seem like genuine tenants or not, still make sure they are referenced correctly and photo ID is verified.
Legal 4 Landlords can offer competitive tenant referencing services for letting agents and landlords, to make that their tenants are worth giving the keys to their property to. Their new online system can produce tenant references within 4 hours, which means there is practically no delay with accepting the new tenants (if they pass). http://www.legal4landlords.com/tenant-referencing/