Tenant referencing-don’t take chances on your tenants

Basic tenant referencing checks are not sufficient to protect a landlord against the possibility of future arrears, research from NGU can confirm, we found 5% of tenants we’ve vetted have one or more CCJ recorded at an undisclosed address.



While this information shows up in basic references – which verifies that the tenant is who they say they are and highlights any background information about the tenant’s history – there is a far more alarming picture which emerges from full referencing checks.



For example, in the first half of 2012, we found a significant percentage of self-employed applicants were unable to provide tax returns or acceptable proof of income and several applicants provided false employment details – as a result these prospective tenants failed our credit vetting procedures.



We’ve found that more comprehensive checks help to protect landlords investments and their income streams.  In much the same way mortgage lenders have become more stringent with their lending to ensure borrowers are able to make repayments, landlords should act in a similar fashion to ensure that the tenant can meet their obligations.



High unemployment and stagnant wages are making conditions particularly tough on those having to rent, with rent in many areas at peak levels, but it makes no business sense for a landlord to rely on an income from someone who is not financially stable.



There is no guarantee that thoroughly screening a potential tenant will avoid taking on a future problem, but it should be the starting point for all landlords.



At NGU Homelettings part of our process includes the following steps which helps to reduce the chances of a “bad tenant” slipping through our credit vetting net:



  • Credit checking to ensure the tenant has no undisclosed history of bad debt.


  • Landlord referencing, for the last 3 years, to ensure the tenant has no past history of being a “bad tenant”.


  • Performing in-house credit vetting to verify the tenants personal details and employment history rather than relying on cheaper and less effective external companies, which the majority of letting agents use.


  • Checking the prospective tenant’s current home to ensure it is well kept since there is no better way to know how a tenant will treat your property than examining their current property.



If you would like some further information on our credit vetting process contact us today and I will be happy to discuss it,



Managing Director



Christopher Fitzakerley