Tenant Referencing: 5 Killer Reasons to Use
5 Killer Reasons to Use Tenant Referencing
If you’re a property owner, and you’re on the lookout for new tenants, it’s natural to want to find potential tenants who you can trust to pay the bills and look after their new home. Sadly, it’s not always easy to achieve this goal.
The referencing process is an incredibly useful tool for landlords and landladies searching for responsible tenants who have the ability to pay rent on time. If you own a property and you’re on the hunt for a new occupant, here are just five of the reasons to invest in tenant referencing.
Affordability: The most critical reason for tenant referencing for the vast majority of rental property owners.
When you sign a contract, and a tenant moves into your home, you assume that you will receive a payment on a specified date every month.
If payments are missed, this could contribute to financial problems, and leave you short. If you’ve set up an agreement, you want to enjoy peace of mind that you’ll receive the agreed sum on time, every month.
Tenant referencing is an excellent means of determining whether an individual tenant or a number of tenants can cover the payment. Referencing involves checking credit history and employment to determine whether the applicants can afford the fees.
Criteria vary, but most companies look for a minimum income of around 2.5 times the annual rental payment. If there is more than one tenant, the affordability check will cover all tenants based on how much they plan to contribute to the total.
For example, if there is a joint application and both parties are paying the same, the referencing company will check that each applicant is able to cover 50% of the agreed rental fee.
Many property owners search for tenants who have a part-time or full-time job. Employment provides an income, and this gives landlords peace of mind when it comes to payments.
It is possible for an applicant to make up a job or embellish the details of a role, and referencing helps to prevent this from happening. If you use referencing to check employment status, you can verify the details provided on the application, and make sure your tenants are receiving an income.
An employability check can also be used to confirm the length of an employment contract and ensure that it fits in with the term of the tenancy agreement.
Punctuality and missed payments can be avoided with tenant referencing
When you own a property, you want to receive your money on time without fail. Referencing can provide you with information about income and affordability, but it will also flag up issues such as missed or late payments. If tenants have defaulted several times in the past, you may want to continue your search.
Reliability and trustworthiness
The dream for a property owner is to find a tenant who treats the premises like they would their own home. As a landlord or landlady, you want to have faith in your tenants and be able to trust them to look after your property.
With tenant referencing, you can ask for information from previous landlords. Referencing may flag up issues like property damage, for example, which may make you think twice about signing on the dotted line.
Damage to a rental property may result in unexpected repair costs, but it could also affect the value of the house or flat and its level of appeal to prospective tenants or buyers. With a reference from previous owners, you can protect your investment and reduce the risk of getting involved with tenants who may potentially be problematic.
Every property owner wants to find a tenant who has the ability to pay their rent on time without any problems. Referencing covers current income and employment status, but it can also provide details of financial status.
If an application has a CCJ or they have filed for bankruptcy in the past, for example, this information will be provided by the referencing company. If an applicant has faced action for rent arrears, it’s important that a prospective owner is aware of this situation before they make a decision.
When you own a property, and you rent it out, you want to be able to live life without worrying about whether your tenant is going to pay their rent on time or fearing that the house will be in a state next time an inspection is planned.
You want to find a person or a group of people who will look after and care for the property and pay bills and rent on the agreed date. Tenant referencing can help you find reliable tenants with a secure income and glowing references from previous landlords.