Low risk letting is every landlord’s aim. However, if you don’t undertake thorough tenant screening, it’s difficult to know for certain if your tenant will prove reliable.
What Is An HMO Tenant Reference?
Most referencing will consist of the following:
- A tenant credit check – a rental credit check gives a detailed insight into the applicant’s credit profile. Providing a credit score for renting property, it documents poor credit history such as County Court Judgments (CCJ), Bankruptcies and Insolvencies. Previous residency addresses, Electoral Roll data, and demographic CAMEO information should also be included.
- An income reference – supported by official documentation, a thorough income report should detail how much money the tenant receives, employment contract dates and an employer reference for the landlord. Essentially, this provides an evaluation of what the tenant can afford.
- A landlord reference – a landlord reference letter will detail the applicant’s suitability as a tenant. It should provide confirmation that rent was paid, whether it was paid on time and in full, and whether the property was left in good condition.
Unfortunately, many landlords make the following two unforgivable mistakes:
- Accept the first tenants that come along because they just want the rent to start rolling in;
- Don’t bother referencing their applicants (for whatever reason).
Why Is An HMO Tenant Referencing So Important?
Before entrusting their biggest asset to a tenant, landlords need to know:
- Are the applicant’s details genuine?
- Do they have adequate income to comfortably cover the rent?
- Do they have any adverse credit history?
Many landlords will also want to know whether their potential tenant is considered honest, reliable and trustworthy.
By not checking these details, landlords risk significant loss of income and damage to their property – along with the hassle and stress that comes with trying to sort this out.
The landlord reference check should confirm whether the previous landlord was happy with the tenant and would be willing to rent to them again.
Right To Rent Checks
It’s important to remember that landlords who rent HMOS privately in England must conduct a right to rent check to make sure they are not entering into anHMO tenancy agreement involving an illegal migrant.
Landlords must follow the government’s guidance on checking immigration documents.
How To Carry Out An HMO Tenant Reference
- Some landlords may decide to conduct their own tenant check. In this case, they will need to ask applicants to provide them with specific proof of income and any other information they require to help them make an informed decision;
- The majority of HMO landlords will instruct a reputable and trusted direct-to-landlord referencing provider to do the work on their behalf. This saves time and hassle, and gives added peace of mind that the housing reference is being carried out by experienced professionals, who are able to source and verify the correct information.
What Does A Professional Rental Reference Provide?
- A reputable referencing supplier will produce a comprehensive report that reveals a detailed summary of risk including credit reports, and both income and landlord references;
- Some providers will also carry out a bank verification to confirm the validity of the bank account details the applicant has provided, preventing any nasty surprises later down the line from potential fraudulent data;
- The report will give a clear recommendation – to accept or, in the event of a tenant reference check fail, to decline.
How To Choose A Reference Supplier
- It’s important that a landlord has confidence in their referencing supplier. Take time to research legitimate and experienced specialist providers that provide robust and accurate checks;
- While cost is a factor, don’t cut corners. Getting it right at this stage can save a lot of time and money later down the line;
- Most tenant referencing companies will offer different levels of service, from basic to enhanced background checks. One size doesn’t fit all, as every tenancy is unique and every landlord’s tolerance of risk is different.
How Long Does Tenant Referencing Take?
- This will depend on who does the rental reference check. A reputable and professional referencing agency should return a credit check for renting an HMO almost immediately. Additional checks will take longer, but in most cases the full, detailed letting reference report should be completed within a few days.
Being able to rely on the services of a specialist tenant referencing company can provide peace of mind, as it leaves nothing to chance.