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Thursday, 1 May 2014

4 reasons why referencing a new tenant is vital

Good Afternoon                                                          

One of the most important things an agent will do for a landlord is to reference potential tenants.  Tenants fall into 2 different categories-dishonest and honest.   Professional referencing helps to sort one from the other.

As we go through life things happen that we cannot always control-if they are financial we get a bad credit file which can stay with us for many years.  When we need to move house either as a tenant or a buyer we need a good credit file in order to satisfy a potential landlord or lender.  In the letting business I come across all sorts of oddities. There was the case of the gentleman who had been through a bad divorce, taken help from the local benefits office fraudulently then moved area and then wondered why we wouldn’t let to him after we discovered he had a CCJ against him for £32000.00!

  That is an extreme case but we get many cases where people have had problems with mobile phone companies and similar and judgements against them for small amounts - often £100 or less.  The point is here that if they tell us that they have had a small problem in the past it is more  likely that we can take a lenient view of the tenant and let them a property (after discussing it with their potential landlord- all landlords are shown a copy of their future tenants referencing here at Martin and Co, Weymouth)   If that tenant denies the problem from the beginning we cannot get an accept under any circumstances.  This is typical of the ‘naïve’ tenant

An informed tenant will be honest and truthful right from the start and we will work with them in order to secure them a let.

Private landlords do not have easy access to referencing and are taking a big risk with their investment.  A previous landlord will probably send in a glowing report just to get rid of their problem tenant.  Tenants will often say they have brought their references with them.  How easy is it to produce a letter from a fake employer or landlord.  As a landlord you have to weigh up all these points and calculate the risk you are taking putting a poorly referenced tenant into your property.

We had a tenant recently whose previous landlord had gone awol.  No reference!  So we asked for his bank statements which showed his salary being regularly paid and his rent going out, it also showed the return of his deposit which when cross referenced with his previous tenancy showed that the complete deposit was returned – no deductions.  Meaning of course that he left the property in good condition! Together with his employers letter showing full employment we were able to prove to the new landlord that this tenant was a responsible reliable person.

So, the 4 reasons are
1 A credit check can find issues that may go back years (6) –if we know what they are we can take a judgement-it can also catch a tenant out.

2 A good reference proves affordability-do they earn enough? and do they spend more than they earn?
3 Employment is checked

4 If the reference is a little ‘sticky’ we can ask for a guarantor-most people will have a friend who will stand by them-if they haven’t you would have to ask yourself ‘why?’

One of the added advantages of having a tenant referenced through Martin and Co Weymouth is that we can offer all new  landlords a FREE 6 month rent guarantee on every let supported by acceptable references.  This is on the property and will remain in force even if the tenants change - if you decide to continue with it after the initial free 6 months  If the tenant don’t pay we will!
Philip Wakefield    01/05/2014

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