Thoroughly reference check your tenants
Unfortunately, at some point during the lifetime of your buy to let investment, you're likely to have a problem tenant.
The most common issue is non-payment of rent, but other tenant problems include:
- Causing nuisance to neighbours – with noise or otherwise
- Damaging the property/contents
- Not advising you of required repairs
- Leaving the property without giving notice
- Tenants splitting up resulting in financial difficulties
- Arguments causing issues between tenants (particularly in Homes in Multiple Occupation)
- Keeping pets when they are not allowed
- Conducting illegal activity from the property (such as running a cannabis farm)
There’s no way to guarantee a tenancy will be problem-free. But carrying out a thorough reference check of your tenants should minimise the likelihood of there being issues.
Asking people to fill in an application form is a helpful way of checking how serious they are about renting your property. If you use a letting agent, they’ll do this for you. If you’re letting the property yourself, we suggest your application form includes:
- Contact information via email, mobile and landline phone, if possible
- Previous addresses up to three years
- Current address
- Previous utility bills as proof of address (gas, electricity, water - NOT mobile phone)
- If renting, current landlord’s contact details and rent amount
- Job information
- Employer’s reference details
- Bank account information
- Guarantor details (if required)
- Next of kin details
- Driving licence details and/or passport details (take a copy)
- Car registration number
- National Insurance number (or equivalent)
- Declaration of any CCJs, unspent convictions and previous financial difficulties
- Required move in date and length of tenancy
Ask the tenant to sign the form to confirm the details are correct. Check their signature against their passport and driving licence.
If you’re using a letting agent, make sure they’re a fully paid-up member of NALS (www.nalscheme.co.uk) or ARLA (www.arla.co.uk).These agents have insurance, which means if they go bust or run off with your cash, you are compensated through an insurance scheme.They are also likely to have a robust credit check system, but you should still find out exactly how they reference tenants.
The best way to run a credit check is via an online credit checking company.The report will show the tenant’s history of repayments where they’ve had credit in the past. It will also show their related addresses.You can therefore check the information they’ve given you on their application form and see whether they usually pay their debts on time each month.
But if a prospective tenant has never borrowed money, used a credit card or is new to the UK, there is unlikely to be any information on them.Also be aware that some people may have managed to secure a false credit report, so always do your own checks - don’t accept them from anyone else.
If your tenant needs a guarantor - especially if it’s someone who’s not a relative - make sure you fully check the guarantor as well. If you don’t and the guarantor turns out not to have the money to cover what the tenant owes, any rent guarantee insurance you have may be invalidated.
References from Landlords and Employers
Anyone can falsify a reference, so do everything you can to make sure the ones you hold are real. Write to the tenant’s previous landlord at their home, rather than simply accepting a reference letter that’s already been written.You can check that the landlord owns their home by looking on www.landregistry.gov.uk/.You can also check that they own the property the tenant rented.
For the employer’s reference, either hand-deliver a reference request letter or send it recorded delivery. Check the address you are sending it to is the employer’s actual address by looking the company up online. Ring a landline number and ask to either speak directly to the tenant’s employer reference, or have a receptionist confirm the referee works there.