1. Don't Be Blasé
Once upon a time when David Lawrenson, landlord expert and author of Successful Property Letting - How to Make Money in Buy to Let, was a young buy-to-let innocent, he was conned by a bogus tenant.
"I didn’t do my checks," he admits. "I phoned his employer, but the person who answered gave a false reference.
"The tenant didn’t pay the rent, and he annoyed the neighbours." And, just before he was evicted, the tenant from hell sublet the property and ran off with the money.
"I lost a lot of money and at least four people got duped."
But, instead of giving up the BTL game, David used his experience to develop a system to ensure that it never happens again. Below he shares his experiences and offers some useful advice.
2. The Initial List
Before David Lawrenson takes on a new tenant he gives them a list of information that he will need and asks them to provide it themselves.
He also makes it clear that any expenses incurred will be paid by the tenant, even if their application is unsuccessful.
This is part one of the screening process and will put off people who are being untruthful. "A fraudster will pick a softer target," says David.
3. Basic ID
Next he makes sure that the tenant is who they say they are.
He always asks for a recent original photograph, and takes a photocopy of their passport, which he holds onto just in case.
If your tenant is from outside of the EU you may also need to see their permit or visa entitling them to work in the UK.
4. Employer's Verifications
Unless you are happy to take on DSS or student tenants, you will need a letter, on headed paper, from a senior officer at your prospective tenant’s place of work.
As a minimum the letter must state:
• How long the tenant has been an employee
• The type employment contract, ie temporary or permanent
• The salary
But, advises David, you could follow this up with a phone call.
"Check out the company’s website, then phone the switchboard and ask to be put through to the relevant person, don’t rely on the direct line number you’re given."
5. Previous Landlord’s Reference
A letter from a recent landlord is also vital and should contain:
• The start and end dates of the tenancy
• The rent amount
• Whether the rent was always paid on time
• Comments on the tenant’s conduct, and whether they were a reliable, honest and trustworthy tenant.
To be sure that the landlord is genuine, David suggests carrying out a Land Registry search (at a cost of £3) to determine that he or she actually owns the property (this is something tenants should consider too).
However, do bear in mind that a property could be in a wife's or relative’s name.
No matter how glowing an existing landlord’s reference, remember that someone trying to get rid of a terrible tenant may lie just to get shot of them.
Again, David would suggest phoning the landlord once you’ve received the reference. You may be able to tell more from a tone of voice than from words on a page.
And, if you want to be completely certain, ask for a reference from the landlord before this one – he or she would have nothing to gain from fudging the facts.
6. Bank Statements
Ask to see the tenant’s last three months of bank statements. David says:
"I simply have a quick glance at the bank statement to check on two things.
1. Their address (as an alternative to utility bills)
2. To see that monies are being paid in there from their employer - so it is a double check on the employment references, which can easily be forged. This is especially important especially for anyone who works at a small company.
As an alternative I would accept payslips if everything else was fine ... but bear in mind that these can be forged (there are companies online who specialise in it).
If, for some valid reason, the statement doesn’t contain their current address ask to see the last quarter’s utility bills.
And if the tenant’s employer doesn’t pay directly into their bank account you will need to see the last three months’ original pay slips too.
If you’re willing to take on someone who is self-employed ask for other proof of income.
7. Credit Checks
Lastly, once David is satisfied with all of the above, he will undertake a credit reference check.
The tenant needs to give his or her permission for this to be carried out, at a cost of about £10, and you should have an answer back within a few hours.
If this all sounds too time consuming, there are plenty of companies that will take on the job for you.
Among them are the schemes run by The National Landlords Association (NLA), the Residential Landlord’s Association (RLA).
Discounts are available to members, and costs vary from £6 for a basic check with the NLA scheme up to £25 for a full check for non-members.
If you’re in a hurry Rentchecks.com and TenantVERIFY are among the providers that will attempt to come up with a full recommendation report within a day for a cost of £31.25 to £45.50.
And, if you have several properties to rent, look out for companies that will offer a discount for bulk purchasing.
8. Letting Agent Checks
If you are using a letting agent you may have to leave it to them to use whichever company they prefer to carry out the checks.
Most agents are very careful, but always confirm that a full range of checks have actually been done before agreeing to a tenancy.
"I know an amateur landlord who got the tenant from hell through a letting agent," says David.
"I use letting agents for my properties outside London. They do a good job but I request a copy of the tenant’s application form and I also request reports letters the agents obtained."
Armed with the tenant’s application form David often calls up prospective tenants, even if they have been interviewed by an agency, though he admits that not everyone has time to do this.
9. Basic Instinct
Although the checks are vital, there’s still plenty of room for using common sense and instinct when choosing tenants.
"If you have a choice, pick people who look well placed to stay in their jobs or who are bright enough to get another one if the axe falls on their current employment," says David.
And watch out for tenants that are going to be hard work, such as people who can’t even find the property.
"A guy rang about nine times once trying to find a property. In the end I gave up on him. It’s not a good start," says David.
Conversely David has taken a leap of faith with people with a checkered past. "You get a gut instinct about them.
"A recent tenant of mine had an IVA. I said I would need a guarantor, and I asked for a slightly higher deposit. She did everything I asked and she’s been a fine tenant."
10. If It All Goes Wrong…
Particularly at the moment, with an uncertain job market, even the best tenant can find themselves unable to pay.
They may have a fixed term tenancy agreement. But it’s lunacy to hold them to it if they’re struggling to come up with the rent.
So if it happens to you, cut your losses, let them go early, and get ready to vet your new tenant.
Nikki Sheehan
Feedback on this story
From: David H
Date: 12.2.09 As a property renter or land lord or what ever can I ask you to understand there are two sides to every relationship, not all land lords (its just a legal term, not a regal one) are the same, just like not all tenants are the same. I DO ensure the property is safe, clean, certificated and even throw in periodic decoration for long term tenants. I cover the mortgage and hope one day this will be my pension. I worked tirelessly for decades to be able to afford the house but still count my good fortune to be in such a position. I have been left with debt, CCJ's issued against my property for the tenants debt, unpaid bills, vandalized properties (trust me, 1 months rent does not pay for a wrecked house and this happens a lot), unpaid rent, tenancy agreements broken with lack of payment, agents charging for unauthorized work, agents fixing things that are not broken, agents making deals with the tenant. I have had problems direct and indirect. I have also been a tenant for over a decade so see things from both sides. If a tenant is legally pursued, and is a bad tenant, how does an agency or landlord know - they don't - the CCJ is issued against a (rented) property. What advice would you give? if you don't think David L is right, state what you think IS right so that both landlord and tenant are protected. Some people is this world are not nice, some people are fair and just, we would all love to see laws and systems where fair people (tenant and land lord alike) are fairly and unjust people (tenant and land lord alike) get their just deserves. So instead of telling us how stupid the author is, tell is how you think it could be done. |
From: John Giles
Date: 10.2.09 This is unbelievable! What is this world coming to. We are complicating everything. All these checks and bank statements are ridiculous. Just let the tennant sign a legal document that says you may evict him immediately should he not pay the rent. Regards the deposit, this should be kept in an attorney's trust account and the interest after the lease period goes to the tennant should an appointed INDEPENDENT find the property to be in good order. The costs of all this should be worked into the rental advertised by the renter. |
From: Sally
Date: 6.2.09 This is all so one-sided - if the landlord is going to insist on this much information, then they should volunteer a similar amount of information to the tenant - including references from past tenants, and details of the mortgage. |
From: Pauline Birmingham
Date: 31.1.09 Having just endured the incompentancy of "an established agent" I am lifted by the recommendantions. I will use many on the items listed in selecting my next tenant. I will not be so naive next time. Why I trusted the agent I have no idea now, My property in my biggest asset I have worked for years to pay the mortgage and I released it in to the care of a complete stranger expecting them to care about it too. I think I will ask for personal recommendations next time I select an agent I will also contact them more frequently. I have always been a model tenant myself so I know they exist and I treat my landlords property as if it was my own. Wish me luck in finding a GOOD tenant as I AM a GOOD landlord. I just cant live in my own home at the moment. All I want is for someone to look after it and live living in it, is that too much to ask? |
From: Mary
Date: 29.1.09 My husband and I are good and sympathetic landlords in a small town and we have noticed a deterioration of quality tenants in the past three years. Some tenants just do not think they need to pay the rent if they do not want to and it took us up to 9 months to evict them with loss of rent,court costs, bailiffs, heartache and worry. So, please do not think the law is on the landlord side, because it far more partial towards a tenant.
By the way, all the necessary checks were carried out, so, we have not been naive or unprepared. We have been landlords for the past 11 years.
Conclusion: there are good and bad people on both sides! |
From: Hilary Hutchinson
Date: 29.1.09 This was the most useful advice on letting a property that I have read and I found it to be extremely helpful. I did read through the other comments from tenants above and am surprised that they feel everything is stacked against them. It's such a pity that there are so many bad landlord's out there, gives all of us a 'bad name' - however we most certainly are not all the same and we feel that much is actually stacked against us! It is most definately not easy responsibility. It should be a two-way thing and if the tenant wants a landlord to trust their property to them they should be willing to prove that they are a trustworthy tenant! Serious professional Landlords are way too busy to be thinking of taking bank information and stealing identification! |
From: Miriama
Date: 15.1.09 Next they will want a pint of blood...
I am surprised that someone would show bank statements in this time of identity theft. |
From: Maria
Date: 14.1.09 What a load of b.s.
Next they will ask to speak to someone who used to employ me 10 years ago. I agree I would never show someone my bank statement or let them take a copy of my passport. It`s easy to be a victim of stolen identity. |
From: george
Date: 14.1.09 Wowwwwww!
Where does this David lets flats to? Buckingham palace? |
From: Darren
Date: 12.1.09 As a tennant I would not object to providing this information. Do us tennants not deserve to be able to "vet" our landlords in a similar manner? In these uncertain times, we would never know if they paying the mortgage until it is too late !! |
From: Wout
Date: 9.1.09 I would agree that unless the landlord is someone I know (doubtful) I would not show them my bank statements. You can think what you want, but having been the target of card fraud twice and identity fraud six times, I think it would be quite stupid to show them to someone I don't know. I'm offering them a deposit as trust, so the argument of "I'm trusting you with my property so you should show me trust with your details" doesn't fly. |
From: Lee
Date: 7.1.09 I am now renting with a horrible landlord and an equally incompetent agent. Problems with the house were not resolved. The house alarm was not working and the landlord claimed that it was "not part of the house." The boiler is not working properly and until today,( the 6 month contract expires in 10 days) I have yet to receive the original contract!I have now decided to withhold the rent untill the matters are resolved. There should be a check on landlords and letting agents as well. It should be required by the law that references be made avilable to tenants about landords. The current administation of the contract is very unfair to the tenants. |
From: James
Date: 20.12.08 Roy,
Bank statements can be VERY important. They show a prospective tenant's overall spending commitment. They could be on £100,000p/a, but if they are spending £105,000 there could be trouble. I always ask to see 3 months bank statements and if someone doesn't want to show them, he can look for another flat. I'd rather leave a property empty than take the risk. As long as you ensure that all personal data is destroyed/returned once viewed I can't see the problem - if you're asking someone to trust you with their property, I think trusting them with bank/salary information is more than reasonable. Irene,
The tanacy deposit scheme now protects against such bad landlords. The deposit is held in a government approved scheme and, basically, both parties have to agree before any monies can be deducted. |
From: Sergey
Date: 30.11.08 Yes! That's funny :)) Bank statement, passport, payslips, visa. What else ? - maybe to train "landlord" how to make my signature and let him get a few credits on my name? That's too much. The landlord should dance the mambo around me and should be happy until I pay him for his UK's overestimated property (that soon will start to cost it's real price). And please use the word "property renter" instead of "landlord", due to the real noble LANDLORD will never give his land and especially his house to anybody! And what's that mean outside of EU. Is this a kind of "outer space" or what? Dangerous military zone? Mr. David Lawrenson, use your intellect before giving such an advices. Tenants are the same everywhere in the world. They are people, with different level of income, education, mentality and physical development. So do not estimate everybody as pure devastating evil. Making "buy to let business" requires some efforts from the property lender. It's not a tap of money which running smoothly.Keep it in mind.
And don't forget to pay taxes :)) HM Revenue & Customs Tax Evasion Hotline will be pleased about untaxed income. |
From: Sara (letting agent)
Date: 27.11.08 Landlords have an absolute right to verify financial strength. Our referencing is vigorous and prospective tenants know at the outset what we need from them. We are just as careful about which landlords we take on and if I wouldn't live in a property myself then I don't expect anyone else to. |
From: Roy
Date: 13.11.08 I would never show my bank statements to a new landlord! This is going to far. There not only have nothing to offer but very often ask for too much. Nobody should see my statement or salary if dont want to show it. |
From: Irene Restall
Date: 6.11.08 My husband and I used to rent. We had a top end market rental house 6 years ago. The landlord was a scoundrel. He gave a false gas certificate. He kept turning up and chopping down trees and shrubs and ruining a very nice garden, sometimes taking all day to do it,even bringing his dragon of a mother, who poked around the house. He then sold off the bottom half of the 1 acre garden to a next door neighbour for 20,000 and denied it, although the neighbour came round to ask if she could put her fence up across the garden! This was halfway through our second renewal. We left early and lost our deposit, he had the temerity to chase us for the remainder of the rental, even though half the garden we had paid for (including our vegetable patch) had disappeared into next doors garden and a 6ft fence put in. Sometimes the shoe is on the other foot and it is not the downtrodden (perfectly good) tenants who are the automatic villain of the piece. The scam of the "non-returnable deposit" is just an example. There will always be some excuse to be found even if there isnt one, to keep the deposit back. We own our own house now, and are considering letting it - but we will not get up to some of the usual Landlord tricks and harassments! |
