Tenant screening is perhaps the most important part of a landlord’s job. Carrying out tenant screening incorrectly can lead to a loss of income and ultimately harm your reputation as a landlord – so it’s crucial it’s done correctly.
Carolyn Uphill, Chairman of the National Landlords Association (NLA), has said that they “hear time and time again from landlords who have suffered because they failed to properly vet their tenants before granting a tenancy”.
And tenant demand is growing – in October 2015 the NLA reported that 40% of landlords were seeing an increase in demand in their area. Therefore it’s now more important than ever to be sure that you are letting or renting to the right person.
So how do you properly screen someone who wants to be a tenant?
To make sure you don’t get caught out we thought we would share some of the key steps for how to conduct tenant screening properly.
Before the tenancy begins
- Make sure you take a thorough inventory of the property, with photographs, before a new tenant moves in. This means you’ll have a record of the state of the property and will reduce the chance of possible disputes in the future.
- Get prospective tenants to complete an application form. This form should include sections for personal details, previous addresses and contact information of former landlords, employment and income, credit references, and personal references. Also include a section for them to sign off on consenting to further background checks.
- Contact the former landlords for a reference on the applicant. Find out if they were paid in full and on time and whether the tenant provided any problems, such as property damage or complaints from neighbours.
- Conduct a credit check on the applicant. This is one of the more important parts of tenant screening, as it will tell you if there’s likely to be any issues when it comes to collecting rent. Websites such as Experian can be a good resource for landlords looking to carry out such checks.
- Contact the applicant’s employer – this is to determine that they do hold employment and that they’re earning the amount stated and able to pay rent.
- If you can, meet with the applicant before anything is signed and have a face-to-face interview with them.
Should an applicant not pass screening for one or more of these points or is deemed to be in a ‘risk category’ (e.g. a student or unemployed), a guarantor agreement can be used to protect you against a payment default.
After the tenancy is underway
- Once your applicant has passed the tenant screening process and has moved in, make sure to visit the property two to four weeks after tenancy begins. This is to verify that they’re in fact living there and haven’t sub-let immediately to somebody else.
Tenant screening reduces your risk as a landlord and should be taken seriously. By following the steps listed above you’ll be well on the way to safeguarding yourself against potentially unsuitable tenants and giving yourself peace of mind that your property is in good hands.