While Covid-19 may have initially had a negative impact on the rental market in the UK, there are some initial signs that this trend may be about to reverse.
More specifically, the demand for central London rental properties has increased by a staggering 195% when compared to January 2020, with estate agent Dexters revealing that more than 330 deals were agreed every week during the first month of the New Year.
Although this is good news for landlords, it’s more important than ever that property owners carry out detailed reference checks on potential tenants. But what are tenant referencing checks, and what exactly should they look for?
What are Tenant Reference Checks?
As the name suggests, a tenant reference check refers to a simple way of determining whether a prospective tenant is reliable and capable of meeting their monthly repayments.
While these checks cannot provide any guarantee that a particular tenant will regularly pay their rent in full and on-time, they thoroughly vet credit scores and former landlord references (amongst other things) to inform landlords and help them arrive at a viable decision.
The goal is to use tenant references as a way of determining the best potential candidate when there is considerable demand for a property, with a view to optimising the landlord’s investment and minimising future costs.
This process is also crucial in helping letting agents to avoid subsequent legal issues taken up by disgruntled landlords, particularly in the case of unpaid rent or damages being incurred against the property.
But why is this process even more important in the current climate? Well, the coronavirus crisis has introduced some much-needed protections for tenants, with landlords now required to offer a notice period of six months for eviction in instances where less than six months of rent is unpaid.
So, by carrying out detailed and thorough tenant reference checks, they can minimise the risk of their rent going unpaid even as Covid’s socio-economic impact continues to bite hard.
What Does a Tenant Reference Check Include?
Aside from the initial credit check and former landlord references, there are a few other things that will be included in a typical tenant reference process.
For example, it should feature a review of the electoral roll, in order to confirm that the applicant has provided an accurate current address and can be considered trustworthy.
Of course, not everyone is listed on the electoral roll at their address, but this may highlight something that you want to raise directly with the tenant.
The process should also include a so-called “application consistency cross-check”, which alerts the agent to a tenant who has multiple applications submitted. Finally, the agency should attempt to validate the tenant’s bank details, guaranteeing that they hold a viable and active UK account.
The question that remains, of course, is how do you ensure that this type of check is carried out in full and in a way that complies with UK law? The best way is to utilise an established letting agent such as HomeLet, who has considerable experience of the mark and has completed thousands of similar checks before.
This way, you can optimise the quality and viability of your tenants, while creating a legal safeguard in the event of things going wrong.