Why is tenant referencing so important?
Fri 24 Aug 2018
To get the most from your rental homes - in the form of solid rental yields and strong capital gains over time – you need to fill them with good, reliable tenants. These renters will pay you on time, treat your home as if it’s their own and cause you no major hassle or bother.
However, to ensure you get the best tenants in place, you need to appropriately vet those who want to live in your property. That’s where tenant referencing becomes so key, enabling you to check on the credentials of would-be renters.
What does tenant referencing involve?
In essence, tenant referencing involves checking the suitability of prospective renters before they move into your properties. It’s a key part of the letting process, offering you peace of mind and reassurance that your tenants are who they say they are and are likely to look after your property and pay their rent on a consistent basis.
It will include sourcing references, usually from their place of work, and may also involve credit checks to ensure they are reliable when it comes to money.
It will help to flag up if a tenant has failed to pay rent or other regular payments in the past, and will allow you to confirm their personal details, their employment status and their tenancy history.
Often, a full tenant reference will include identity confirmation, residency confirmation and written confirmation of employment/income from an employer or accountant. A full credit history check may also be carried out, including looking for a tenant’s presence on the electoral register, monitoring existing credit accounts and credit scores, and identifying any bankruptcy and IVA (individual voluntary arrangement) data.
A rent affordability calculation – in other words, working out how much a tenant can realistically afford to pay in rent each month – is another way in which tenants can be referenced for their suitability.
What if a tenant has a guarantor?
In some cases, particularly if a tenant is young, a student, has a negative credit history or is employed in a temporary position, they may not meet the required criteria and may have a guarantor in place – someone who will pay the necessary rent if the tenant in question is unable to. It’s important, if you let to a tenant with a guarantor, to check their credentials to ensure they have the financial means to step in if needed.
A full guarantor reference will involve similar checks to a tenant reference, with written confirmation that the guarantor has sufficient income/assets, as well as residency and identity confirmation and a full credit history.
How can a letting agent help?
Very often, your letting agent will do a lot of the above on your behalf, either in-house or by employing the services of a tenant referencing specialist.
Here at Letting Solutions, West Lothian’s first dedicated lettings agency, we place a key emphasis on successful tenant placement – recommending suitable tenants, selecting them and then referencing them.
A long-term relationship
Good, reliable tenants are more likely to stay for the long-term and increase your chances of achieving decent rental yields, so it pays to think ahead when it comes to securing tenants. By referencing thoroughly before letting your home, you reduce the risks of encountering bad or rogue tenants who will treat your property poorly and may fail to pay their rent each month.
This is likely to lead to disputes, issues and complications, and may hit you in the pocket too, so vetting tenants is an absolutely essential part of the process and could save you plenty of time, money and stress in the future.
For more information about letting your property in West Lothian, and getting the best tenants in place, please get in touch with Letting Solutions on 01506 496 006.
We have the skills and knowledge to help maximise your rental yields and reference tenants in an effective manner.
What’s more, we offer a free and instant online valuation to give you an idea of how much you could be charging in rent each month.