Lettings Focus: The Importance of Quality Referencing
Being a landlord isn’t easy. Letting a property brings with it all sorts of challenges, including the possibility of disputes with your tenants. One of the more alarming scenarios is non-payment of rent.
Fortunately, this doesn’t happen often. Nevertheless, it’s important that all landlords mitigate this risk as far as possible.
What can I do to reduce the risk?
When it comes to problems in tenancies such as non-payment of rent or other financial disputes, discrepancies at the beginning of a tenancy and referencing completed before move-in can often identify potential issues.
Problems can arise when, for example, a tenant fails the referencing procedure or a tenant’s circumstances change mid-tenancy and suitable re-referencing isn’t completed accordingly.
In the current climate where demand for rental properties is outstripping supply, landlords have the power of choice of tenant. It’s important to take advantage of this by introducing a screening process.
What’s the best way to screen potential tenants?
An effective screening process could be a series of questions designed to understand a prospective tenant’s situation and give them the opportunity to be up front about any matters that may affect the tenancy. For example, whether they have pets, whether they smoke, if they have an adverse credit history or experienced employment issues.
A third-party referencing agency will typically verify the legitimacy of ID, confirm earnings, contact previous landlords for references (where applicable) and run a soft print credit check (which doesn’t affect the tenant’s credit rating).
Why is thorough referencing so important?
Naturally, all this information is extremely valuable for a landlord. However, beyond the peace of mind it brings, it’s an important qualification step for insurances. Most rent guarantee insurance will not pay out without evidence that a tenant has passed reference checks.
If you have overheads as a landlord, like a mortgage on your rental property for example, you wouldn’t simply be able to stop paying it when the tenant stops paying their rent.
Rent guarantee insurance usually covers areas such as:
- Non-payment of rent up to a specific value.
- Legal costs for both service of notices and the eviction process should the tenant fail to leave or fail to pay off any arrears.
- Additional cover for a vacant property post eviction
At Nicol & Co, we cover all pre-screening of potential tenants through a unique marketing plan that we’ve put together. As well as including pre-screening this plan also sets us a target to have the initial let agreed within one week. You can see this plan in full below.
We also offer full referencing via a third-party referencing company which is included in all our full-service offerings. Additionally, we do have a rent guarantee service available.
If you’d like to hear more about our lettings service, please get in touch – we’d love to help.
You can call 01905 675 999 or email [email protected]