SECURING, SELECTING AND VETTING TENANTS
Back
Introduction
Securing Tenants
Housing Benefit
Selecting Tenants
Holding a Retainer
Vetting Tenants
References
Practical Documentation
Introduction
Methods for securing, selecting and vetting tenants differ according to the type of tenant that may be attracted to your property. A few examples relating to the most common types of tenancy are detailed in this section.
Securing Tenants
Professionals
This term is frequently used for potential tenants who are seeking private rented accommodation for job related reasons. They may be on short-term employment contracts or requiring temporary accommodation whilst they search for a permanent home in the locality.
Methods that could attract potential tenants include newspaper advertisements, circulating details of the property to local employers or erecting a 'to let' sign outside the property if it is (for example) located on a main road.
Advertisements should always include a brief description of the accommodation on offer, its' location, monthly rent and contact phone number. The date from which the accommodation is available could also be included if it is not available for immediate occupation.
If literature is to be circulated to local companies, consider using photographs of both internal and external forms.
Students
Many universities and colleges offer registration schemes for properties in the private rented sector. The main purpose of this service is to ensure that accommodation offered to students via these schemes meets certain minimum standards.
The minimum legal standard of a landlord's gas safety certificate is always required, as is usually a certificate of electrical safety. Other features requested are usually related to safety (e.g. heat detector, smoke detectors, fire doors etc.) and differ widely across the country.
Many landlords let their properties through recommendation, where their tenants recommend the property and its' landlord to another group. Students are now starting to use services such as the Internet to look for available properties and your local Landlords Association may offer this service.
Housing Benefit
This is normally done through direct contact with the local authority that services the area in which the property is located.
Again, minimum standards relating to gas and electrical safety, condition of the property and other factors will be considered by the local authority.
For more information regarding rent levels and procedures, please read the section on 'letting to tenants on housing benefit'.
Selecting Tenants
It is advisable for landlords to list their criteria for vetting applications from prospective tenants. This may be to exclude tenants with children or pets, students, or those on housing benefit.
Note however, that a landlord cannot exclude anyone on the grounds of race, disability or gender without contravening current legislation.
It is essential to carry out thorough reference checks on prospective tenants and the sort of information that a landlord may ask for (depending on circumstances) is as follows:
- Personal details (age, occupation, married/single etc.)
- Current address (and previous if less than three years)
- Current employment details (or details of last employer)
- Bank details (address, sort code and account number)
- Name of someone who could give a character reference
- Details of any previous county court judgements (CCJ's)
- Details of offences relating to alcohol or drug addiction
- Whether a tenant is in receipt of (or believes themselves entitled to receive) housing benefit
Sample information forms are included at the end of this section.
Holding a Retainer
There may be a delay between a prospective tenant agreeing to take a property, reference checks being carried out and the tenant moving in.
Both to protect the landlord's interests and to ensure that the tenant does not renege on his verbal agreement, it is usual for the landlord to ask him for a non-refundable holding retainer. This should neither be referred to, nor considered as a deposit, since a deposit is an amount held by a landlord against damage to his property and is therefore potentially refundable.
Should the proposed tenant eventually not sign a tenancy agreement or his references do not prove to be satisfactory, then the landlord can legitimately keep either the full amount or part of the retainer, to cover both his advertising costs and the loss of rental income whilst the property is being re-advertised. However, if circumstances arise that prevent the landlord from proceeding with the agreement, then the retainer must be returned in full.
If the potential tenant signs the agreement, then the retainer becomes either part of or the full deposit, depending on the sum of money involved, for the term of the agreement.
Vetting Tenants
Landlords should use the information provided by prospective tenants to take up references, financial and character checks as appropriate.
This should never be taken lightly as once a bad tenant gains possession of a property, it can take many months to remove him legally. Careful records should be kept of all information provided by the tenant as the Housing Act of 1996 introduced ground 17 to protect landlords against false or misleading information provided by tenants, and this ground can be used by landlords to seek possession of the property.
Landlords should consider the following vetting procedures:
References
Check at least two references, employer, bank, character, or previous landlord as appropriate.
Employer's references - These help to establish that the prospective tenant is currently employed and is earning the necessary income to pay the rent. It should also be established that the employment is either regarded as permanent and secure or, if for a temporary contract, it is for the term that the tenant has stated.
If the tenant is not currently employed or is new to an employer, then a reference from their previous employer may well be useful.
Knowing the identity of the company that a tenant works for is also useful in case there is ever any financial dispute regarding rent monies owing. It is possible for a court to enforce repayment of debt using an 'attachment of earnings' order should the tenant leave with money owing.
If the potential tenant is self-employed then it is equally important to determine whether he has a steady income or is likely to be able to maintain one. This is a more difficult situation for the landlord but he can ask to see the tenants account books, or ask for permission for the landlord's own accountants to vet them.
Bank references - Procedures vary form bank to bank but the landlord can either ask his own bank to carry out a reference on his behalf (for which a fee is payable) or he can write to the prospective tenant's bank asking for a reference.
The landlord should provide the following information:
- Consent from the prospective tenant for the information to be released.
- Name and address details of the tenant and his account number
- The amount and frequency of the rent to be paid
- Landlord's own name and address
Again, a fee will be payable to the bank. The banks' response will often be very unspecific but will give either a positive or negative statement regarding the reference. You may well need to 'read between the lines' for an interpretation!
However, always be aware that a bank reference represents an opinion at a particular moment in time.
Credit Checks - A number of companies can now carry these out and they can very quickly check both the credit history of the individual or that of any address that he has given to you. They will usually identify if the individual has any CCJs against him.
Based on a credit rating, the credit referencing company can then advise on the overall credit worthiness of the individual. Your local association can recommend credit reference agency and advise of costs.
Character reference - The value of this reference depends on the status of the individual who is supplying it and should be considered the least reliable of all reference checks. Those of a Doctor, Magistrate or ex-Teacher will be more of use than those of a close friend. Generally the reference should seek to find out:
- The relationship with the potential tenant
- How long and in what capacity they have known him
- How reliable and trustworthy he is considered to be
Guarantors - These are particularly useful where students or young people with no employment history are seeking to become tenants.
Guarantors will be legally obliged to accept responsibility for any rent arrears or other non-adherence to the tenancy agreement. Because they are taking on this responsibility, the landlord may then need to carry out vetting procedures on guarantors to satisfy himself that they are in a position to fulfill their obligation.
Note that this form and the tenancy agreement must both be dated the same.
Practical Documentation
Click on the links below to find your desired document:
· Accommodation application forms (for professional or housing benefit tenants)
· Bank reference request
· Employer request
