5 risks buy-to-let landlord s face when full tenant referencing is poorly done

All good tenants start with full tenant referencing

Recently, I outlined the facts on your tenant referencing and vetting process. In that buy-to-let landlord blog, I discussed three tenancy referencing procedures you have to undertake as a landlord. I also gave five tips to help you avoid bad tenants.

Here, I look at the risks a buy-to-let landlord takes by not doing full tenancy referencing.

Buy-to-let horror story – a house turned B&B

In a recent episode of ‘Nightmare Tenants, Slum Landlords’ (you don’t want the former or be the latter). I watched in horror as a landlord went on for one hell of a ride. She’d moved abroad to do charity work, and leased out her home to a doctor for three years. She thought she’d save some money to put toward her trip by not using the proper referencing process. Her gut instincts had never let her down before.

About six months after moving abroad, the landlord started to receive worrying calls from her ex-neighbours. There were, it seemed, a lot of comings and goings of strangers. The owner decided to return to the UK to find out what was going on in her home.

To cut a long story short, the tenant wasn’t a doctor at all. He was a scammer and a pretty good one at that. He’d rented the 5-bedroom property at around £1,500 per month and had promptly advertised it on Airbnb. By the landlord’s calculation, her tenant was making as much as £10,000 per month by letting her home as a B&B!

Worse still, because the lease was for three years and with no break clause, she couldn’t easily remove the tenant. She had to bargain with the tenant to leave, through expensive solicitors. And she’d been forced to give up her charity work to be able to deal with the situation. It could have been very different:

Buy-to-let landlords take unnecessary risks when they don’t reference tenants properly. The need to evict is one of the major risks that you’ll take if you don’t do a full and complete check on your tenants.

5 risks when tenants are vetted poorly

Risk 1: Increase the chances of rent arrears

As a buy-to-let landlord, you’re running a business. You’ve got costs to meet, bills to pay, and a mortgage lender that won’t give two hoots that your tenant is behind on their rent. A full and proper tenant reference includes a credit check. The tenant’s credit score will give you a good indication of how they organise their financial affairs.

You’ll also request references from current and previous landlords. A landlord owed due rent will be more than pleased to speak to you and let you know not to touch the tenant with a bargepole.

The final check is to talk to the tenant’s employer and ask about their job title and how long they’ve been working there. Most companies will answer these types of questions. You might also want to probe a little further − it’s amazing what you can find out from an employer. A tenant who’s always late to work on Monday might be one that likes to party hard at weekends. Someone issued a written warning could prove to be a difficult tenant.

Risk 2: Damage on your property

One of the main reasons you want to talk to landlords where the tenant has lived before. Ask if the property was in a good state of repair, and how often the tenant called for emergency maintenance and repair work to be done. The tenant might be one that leaves a property spotless, but also makes a habit of calling once a week at midnight to report a minor problem (perhaps fictional) that could have easily been put off until the morning.

If the tenant has caused damage to a buy-to-let property before, they’re very likely to do so again.

Risk 3: Other tenants and neighbours are possibly at risk

Be honest – you know nothing about your tenant. If you don’t do the right checks and let your buy-to-let property to someone with a criminal record, or a history of domestic violence or aggressive behaviour, you could be putting others at risk.

Risk 4: You suffer buy-to-let stress you can do without

Being a buy-to-let landlord is stressful enough when you’ve got great tenants. First-time landlords worry about on-time rental payment. It’s like a monthly ritual of online checking of bank accounts every ten minutes.

I’m not saying that you shouldn’t check the rent payment – the earlier you get a warning of a problem the better. But you learn not to fret about rent so much when you’re confident that your tenant has a regular job, salary and a good credit score.

You have local tradesmen to source for emergency repairs and maintenance work, and once you’ve had that first 2 am call about a dripping tap, you’ll have broken sleep waiting for the next. And if the rent is late, are your tenants preparing to do a runner, leaving a trail of destruction behind them? What about regular checks and inventory lists?

Ezytrac came about with the specific aim of making the life of a buy-to-let landlord effortless. Taking away the stress by offering a full-service package that takes care of all the responsibilities of being a landlord.

Risk 5: Evicting your tenant

Like the landlord whose story I started this article with. If you haven’t taken all the precautions you can to reference your tenant, it’s more likely that you’ll be stuck with a tenant who doesn’t play by the rules. And that is probably going to end with you needing to evict them − a time-consuming and costly process.

The tenant’s rental history will tell you a lot about them as a tenant. How they behave towards your property, their neighbours, and you.

Reference your tenant for smooth-running rental

There are always risks. Tenant referencing is the buy-to-let landlord’s equivalent of having a professional mechanic look at a car before you buy it. There’s never an absolute guarantee that the wheels won’t come off, but without that check, you’re more likely to purchase a dud.

Contact us by phone +44 1522 503 717 or use our online contact form. For information about our services and how we’ll make sure that we referenced your tenants well, and your tenant risk reduced to a minimum.

Cheers,

Charlotte Jones

 

By | 2016-10-31T07:16:23+00:00 October 31st, 2016|Landlord lessons, News, Property Management, Tenant Management|0 Comments

About the Author:

Arlene didn't start in property, she worked for the likes of Marks and Spencer, Harrods and her own consulting business in Food Technology. In 2009 she took over the chair of Ezytrac Property Group and has overseen its growth since then. Arlene conceived the famous 'Effortless Property' mantra and has been a big proponent of the constant push towards its achievement. Arlene is married to Brett, a fellow property expert and they have 4 kids.