The Screening Process7-02-2019 | Screening Process
Having the right tenants living in your rental property makes all the difference; less worrying, less problem-solving and less headaches. To ensure that you land yourself good tenants, the screening process is vital. This involves doing a credit check, retrieving references, meeting them face-to-face and finding out about their lifestyle. Conducting the screening process correctly will probably make the difference between the perfect tenancy, and the tenancy from hell. Whether it’s you doing the screening, or an agency, here’s the top five things to be aware of…
Bad credit check
You’re renting your property and you’ve had an application from a prospective tenant - but they fail their credit check. What now? It’s up to you - you can reject the application or proceed with the tenant regardless. After all, there’s several good reasons why a perfectly suitable tenant may have a low credit score. For instance, they may not have lived at their current address for long enough to get their name on the electoral register, they may currently live at home and not be responsible for paying any of the bills or perhaps they are not the tenant actually named on the tenancy agreement where they currently live. It’s worth bringing up bad credit with the tenant as there may be mistakes that even they are not aware of. Difficult financial times can happen to anyone - it does not mean that they will not make a good tenant. In saying that, there is obviously a large worry in taking on a tenant with bad credit. If they have a large amount of debt, this probably means that a large majority of their income each month is already committed and they may have difficulty paying their rent on time. You are within your rights to reject a tenant due to a bad credit score.
Although a landlord cannot access a tenants criminal record themselves, they are free to ask questions about any criminal history. In saying that, you cannot refuse the tenant simply because they have a criminal record, as this is discrimination. You may feel instantly put off, but there’s a few things to consider. Was the individual convicted of the crime? There’s a big difference between being arrested and being convicted. What was the offence and how recent was it? Perhaps it happened 20 or more years ago, in which case the tenant is likely to be low risk. Similarly, if the tenant has just one conviction and the nature of the crime isn’t necessarily violent, you’ve probably got nothing to worry about. You can ask that a prospective tenant apply for a basic disclosure certificate from the Disclosure and Barring Service (DBS) which costs £25 to obtain and will identify any unspent criminal convictions that they have. It’s completely your choice whether you open up your property to a tenant such as this, but remember how important it is to be fair and reasonable.
Obtaining references is another way to mitigate the risk of winding up with a bad tenant. It’s proof, if you like, that this person is trustworthy and has given you all the correct information. It’s advisable to ask for references from an employer and also a financial reference to ensure that the tenant can pay the rent. The best reference to get is from a previous landlord and typically, you should insist on references from all landlords from the previous 3-5 years. A landlord reference is useful because you can find out if a tenant is trustworthy, if they paid the rent on time and if they looked after the property.
Don’t be alarmed if no landlord references are available. Your prospective tenant may have never rented before as maybe they are only just leaving home. Only let yourself become suspicious if they refuse to give a landlord reference, or if the landlord refuses to provide one. This is likely to be a bad sign and indicates that you should not take the risk.
When screening and/or interviewing prospective tenants, you have to be careful what kind of questions you are asking. If you come across discriminatory in any way, you could be facing legal action. It is illegal to discriminate tenants on the basis of race, gender, disability, sexuality, age, marital status or religion. Whilst you can check if a prospective tenant is a UK citizen, you cannot ask with country they were born in as this can be interpreted as an invasive question. Similarly, you can ask how many occupants the tenants plan on housing but you cannot ask how many children an applicant has, as this could be discriminatory against familial status. That being said, you are free to refuse rent to anyone, but you must have decent grounds behind this. You can also ‘positively discriminate’, which is when you give someone preferential treatment for whatever reason. This can include offering a property specifically adapted for wheelchair users or the elderly, to a tenant with these characteristics over a young couple for example.
Rejecting a tenant
You want to protect your investment and trust your tenants, so it’s ok to go with your gut if you don’t feel quite right about someone. However, rejecting a tenant can be really tricky unless you have reasonable grounds to do so.
Your reasons could be any number of things - their salary, their pets, too many occupants or perhaps they’re a smoker. Maybe they’ve moved house five times in the past year and you’re concerned about their stability. We recommend that you be fair and honest, even if you are not necessarily required to be. You could make up any old excuse not to accept somebody, but you’ll potentially make the situation worse. Whenever you reject a prospective tenant, you’ll always run the risk of accusations and being unfair. The only way to avoid this is to only reject tenants for valid reasons. You definitely need to come clean if you are rejecting someone based on their credit score, or any other information found in tenant screening reports, as it’s their right to know.
We hope you now feel more prepared to approach the tenant screening process. Do you feel prepared for events such as fire, theft or loss of rent? If your answer is no, you may want to consider landlord insurance. With CIA Landlords, you can compare landlord insurance to find the best quote for your needs. Just give us a call on 01788 818 670 or get a quote now.