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Are your tenants all they seem to be? It’s a critical question. You rely on your tenants to treat your property with the care and respect it deserves and to pay their rent on time. Your relationship with your tenants depends on mutual trust – and to have some reassurance of that, you will need to undertake a tenant background check.
About Us
Effective tenant screening is one of the prerequisites for the comprehensive security and reassurance granted by our Rent Guarantee Insurance.
Our policy typically protects you against tenants who fail to pay their rent, as well as covering the legal costs involved in pursuing those rental arrears or legal proceedings for their eviction. (Policy limits apply).
To provide that level of protection, of course, both you and your insurer rely on adequate tenant background checks having been made at the outset.
The purpose of the vetting process is, broadly, to establish two main characteristics: the financial status of a prospective tenant to establish the likelihood of their paying the rent when it falls due; and, the personal values and reliability of a tenant who will treat your property, neighbours, and those around him or her with respect.
Credit checks
Your buy-to-let business depends upon your tenants paying the rent when it is due. To give you a better understanding of your prospective tenant’s financial position, you will need to obtain (with their permission) a credit check from one of the credit reference agencies, which must be classed as at least satisfactory
There are several main agencies including Equifax and Experian – and their reports will confirm the tenant’s name and current address, as well as any history of insolvency or County Court Judgements (CCJs).
References and background checks
If you want to know how anyone is likely to shape up as a tenant, one of the best ways of finding that out is to ask a former landlord. That is why we require you to get a reference from the previous landlord (where applicable). This will show you whether the individual has been a good tenant – or if there have been issues with the landlord or the neighbours.
We also require policy holders to take up a reference from the prospective tenant’s employer for confirmation that their income will be sufficient for meeting the rent.
Guarantors
If the tenant’s income is not at least 2.5 times the annual rent, or you have any doubts about their financial stability, you would need to ask the tenant to provide a guarantor who would accept responsibility for paying the rent if the tenant were to default.
Guarantors are usually family members or friends of the prospective tenant and typically own their own home.
Country Court Judgements
In order to be covered under our policy, you would need to check that the tenants do not have any County Court Judgements (CCJs) against them in the last three years, and non-outstanding, and no previous bankruptcies.
Right to Rent
As the landlord, you are under a legal obligation to check that any prospective tenant has an immigration status granting them the Right to Rent in England. More information can be found on the Government website.
You should check at least two forms of identification for the tenant(s), including at least one with a photo.
Summary
Except for the Right to Rent, you are not legally required to carry out tenant background checks, but in order to take out our policy you would need to complete all the Tenancy Check requirements that we list.
These are prudent if you want to ensure – as far as possible – that any prospective tenant is going to be responsible; treat your property with care and respect; not create any nuisance for you or the neighbours; and pay the rent in full and on time. At a time where there is growing uncertainty about the rising costs of living, it makes sense to give yourself the assurance that you will have income coming in if for whatever reason the tenant fails to pay their rent.
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*Disclaimer – This blog has been created as general information and should not be taken as advice. Make sure you have the correct level of insurance for your requirements and always review policy documentation. Information is factually accurate at the time of publishing but may have become out of date.
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