Renting a property can be rewarding when you have tenants who pay their rent on time, take care of your property, and are a pleasure to deal with. On the other hand, if you end up with tenants who struggle to pay rent, cause damage, or behave antisocially, you’re facing hassle and expense. That’s why tenant screening is one of the most important things to get right: it’s your chance to weed out potentially problematic tenants.
When it comes to selecting the right tenants for your property it’s sensible to put a robust process in place. Once you have shortlisted possible tenants, it’s a good idea to meet them face-to-face. This gives you the opportunity to ask questions and get a feel for whether you’d be happy letting your property to them. After you have done this there are various background checks you need to complete to make sure applicants can afford to pay your rent, are able to manage their finances, and have a positive track record with other landlords.
- When do you want to move in?
- Why are you moving home?
- How long have you lived in your previous homes?
- Who will be living in the property?
- What is your monthly income?
- Do you have pets?
- Can you pay the deposit and a month’s rent in advance?
- Do you smoke?
- Can you provide a reference from a previous landlord?
- Have you broken a rental agreement?
- Do you have anything you want to ask me?
By asking the right questions you can often get a feel for whether potential tenants are right for your property. Not only will you get an insight into whether they are in a stable financial position, but you can also decide whether you are likely to have a good landlord / tenant relationship. Ideally, you should ask these questions when showing prospective tenants around the property as doing so face-to-face also helps you to pick up on their body language.
If your property is currently vacant you will want to let it as soon as you can. On the other hand, you may still have tenants who are staying for a month or two. Either way, you want to choose replacement tenants who want to move at a time that’s convenient for both you and them.
That said, if candidates are keen to move in as soon as possible, be a little wary. There are plenty of good reasons why people need to move quickly, but you’ll need to conduct background checks to make sure they haven’t recently broken a rental agreement or been evicted.
You want tenants who have legitimate reasons for moving to your property, so ask why they are moving. Good reasons for moving might include wanting more space, having to relocate for work or wanting a property with a garden. Of course, you can verify their answer with their previous landlord when you request a reference.
By asking this you’re looking for evidence of stability. If tenants appear to move on a very regular basis it could be a sign that they won’t stay in your property for very long.
You need to ask this for several reasons. Generally, all adults over the age of 18 living in the property will need to be on the tenancy agreement and are responsible for a share of the rent. This means you will need to conduct background checks on all adult tenants. Secondly, there are laws against overcrowding in rental properties, so you need to make sure you comply with these.
As a rule of thumb, you should be looking for tenants with an income of at least 2.5 times the proposed rent. However, this ratio tends to vary regionally. According to these statistics, average London rents in 2021 were 34.7% of income. At the other end of the scale, the average tenant in the North East paid 23.5% of their income in rent. However, be aware that if you have rent guarantee insurance then it is likely to stipulate that your tenant has a minimum income to rent ratio of 2.5. It’s also essential that you complete full checks on all tenants’ incomes.
It’s also wise to ask what employment tenants have and whether they work from home. It can give you an insight into their financial stability and whether you feel their lifestyle is compatible with living in your property.
A simple question, but essential. If a prospective tenant is having trouble putting together a deposit and rent in advance it may suggest to you that they’ll have difficulties paying rent in the future.
While landlords can currently refuse to let their properties to tenants with pets there are proposed changes to this law. A recent government White Paper has proposed that landlords will not be able to ‘unreasonably’ refuse a tenant’s request to keep a pet in the future. While this won’t have an effect unless it becomes law, it may be a good idea to find out more about the proposed changes and how they might affect your rental.
If a prospective tenant does want to keep a pet and you accept, it may be wise to insist that your tenant takes out pet damage insurance to cover unexpected losses. Landlords can also take out pet damage themselves to cover the rental property.
It’s always worth asking whether tenants smoke. Most landlords prefer to keep their properties smoke free and will include a ‘no smoking’ clause in a tenancy agreement. By asking the question it gives you a chance to tell your tenants about your smoking policy, such as only allowing smoking outdoors.
Asking this question can save you time in the long run. Ideally, you will get a landlord’s reference for each tenant. If they won’t be able to supply one this gives you a chance to find out why. Some reasons are perfectly legitimate. For example, someone who has undergone a relationship breakdown may have had to move out of the home they co-own with their spouse or partner. Similarly, a younger person may be looking for a first tenancy. However, if someone is reluctant to let you ask for a landlord reference it may indicate they have been a troublesome tenant.
If a prospective tenant has broken a rental agreement – or even been evicted – they may be reluctant to answer this question. It’s worth telling them you ask this question so that if anything has gone wrong in the past they can tell you their side of the story.
Always ask this question – it can be very revealing and gives you an insight into what’s important to prospective tenants. For example, they might ask whether they will be allowed to decorate the property, what the neighbours are like, or check what broadband speeds they can expect. It’s also quite possible that a tenant’s questions reveal a reason why your property may not suit them.
Once you have interviewed a number of people and selected your preferred tenants, it’s vital that you run thorough background checks on them. You should do the following:
- A right to rent check. When you let a property in England, you are obliged to conduct a right to rent check to confirm a person’s immigration status. Failing to carry this out can land you with a fine of £3,000 or more. Right to rent checks are not legally required in Wales, Scotland, or Northern Ireland.
- Income and employment checks. You can ask for bank statements and payslips to prove a tenant has sufficient income to pay the rent. It’s also wise to ask permission to contact employers directly for a reference.
- Credit checks. You need to ask a tenant’s permission to conduct a credit check, which will show you whether they have had problems paying bills over the past six years.
- Landlord references. If a tenant has any previous landlords ask the most recent for a reference. You should ask them to confirm that the tenants paid their rent on time, kept the property in good condition, and didn’t break the terms of their lease.
Many landlords outsource background checks to professionals which can save a lot of time and hassle. They can also be very thorough and cost effective. For example, Alan Boswell Group can provide you with a full referencing check that includes employment history, history of residency with a previous landlord reference (where applicable), confirmation of ID and bank account, a credit check and affordability calculation and a full written report. Learn more about this service on our tenant referencing page.
Sometimes, despite the most thorough tenant screening, things can go wrong. A tenant might lose their job or develop health issues that make it difficult – or impossible – to pay rent. That’s why it’s a wise idea to invest in rent guarantee insurance. Provided you have run affordability, credit and right to rent checks on your tenants, rent guarantee insurance can offer you:
- Up to £2,500 rental cover per month, for up to 15 months
- Up to 3 months’ cover following eviction (at 75% of monthly rent)
- Landlord legal expenses up to £100,000 which includes the process of evicting the tenant
To learn more about rent guarantee insurance from Alan Boswell Group contact us on 01603 216399.