Total Landlord Insurance has issued a warning that landlords need to be more thorough with their checks on clients to protect themselves against future rent arrears. The warning comes as figures released by the company show that basic referencing checks do not highlight substantial problems.
Checks
The figures released in September highlighted that 6.4% of tenants had registered one or more CCJ’s at an undisclosed property.[1] This information is disclosed in the most basic of referencing checks, where tenants are required to prove they are who they claim to be. However, a deeper reference check can often provide more discouraging results.
In the first half of 2012, the report found that 23% of self-employed tenants could not provide proof of income or tax returns.[1] It also showed that more than 50 of the applicants provided incorrect employment details.
Thoroughness
CEO of Total Landlords Insurance, Eddie Hooker, called on landlords and agents to carry out more comprehensive investigative checks in order to protect their investment. Hooker said that the checks would not only reveal fraudulent information but also, ‘obtain previous landlord and letting agent references where available.’[1]
He went on to suggest that landlords and agents should look at mortgage lenders as an example on how to move forwards. Hooker commented that, ‘in much the same way mortgage lenders have become more stringent with their lending to ensure borrowers are able to meet repayments, landlords should act in a similar fashion to ensure that the tenant can meet their obligations.
“High unemployment and stagnant wages are making conditions particularly tough on those having to rent, with rent in many areas at peak levels, but it makes no business sense for a landlord to rely on an income from someone who is not financially stable.[1]
No guarantees
Hooker is quick to point out that thorough checks may not alleviate all future problems. However, he believes that it should be the first barrier to rogue tenants; – ‘There is no guarantee that thoroughly screening a potential tenant will avoid taking on a future problem, but it should be the starting point for all landlords.’[1]
[1] http://old.lettingagenttoday.co.uk/news_features/Basic-referencing-checks-may-not-be-enough-warning