Beware of false economies: sure, buy the own brand baked beans or chopped tomatoes to save a few pennies. But, choosing a cheap tenant vetting solution could land you in hot water. Is it worth it?
With the tenant fee ban putting a strain on everyone’s margins. It’s tempting to make cuts everywhere. Be careful you don’t put yourself and your landlords at risk. Make sure you’re asking the seven questions below.
Rent arrears is more likely than you think: 9% of all privately rented households according to the most recent English Housing Survey from ONS. That’s 423,000 households. On top of this there’s:
- Property damage
- Void periods
- Court costs
- Loss of clients
- Reputation damage
What to check when you’re selecting a tenant vetting solution
- How are the checks actually carried out?
- How are the results presented?
- Can you easily speak to them?
- What’s the turnaround time?
- How many applicants are rejected?
- Is referencing their core business?
- Do they support you in following the Property Ombudsman Code of Practice?
The facts behind the results
Employment references should be done in writing, asking for them over the phone isn’t good enough. Simple algorithm checks on passports don’t prevent fraud; they don’t event check that the passport belongs to the applicant. Your referencing supplier needs to be an expert at detecting Right to Rent fakes and imposters. AML and bank account verification should always be included.
Understanding the results
If they aren’t presented clearly, neither you nor your landlord will understand them. This isn’t so much of an issue if the prospective tenant’s application is accepted. But they will want to know why the tenant has failed and will expect you to be able to tell them.
The quality of the report provided is massively important. The referencing process is an audit trail which should stand up to the closest of scrutiny at any point before, during or after the tenancy. Think about what you want to present to your landlord if in three months’ time he comes to you because the applicants are in arrears or have damaged the property and asks to see the references.
Can you speak to them?
It’s important that the agency allow you to retain control but that they are there when you need them. They’re not a business to consumer organisation, they are there to support you. Do they give you everything you need to deal with this part of the lettings process?
What’s the turnaround time?
With the introduction of open banking, it is possible that everyone can produce accurate results in minutes. This might not be available from everyone yet, but it will be in the coming months. If results are being produced this quickly without open banking, you should start asking questions – how thoroughly has everything been checked?
How many applications are rejected?
I often hear “Our tenant referencing agency are great, they accept everyone”. This actually stops me sleeping at night, and it would if I were running a letting agency. I guess the people who say this haven’t been involved in any of the cases where tenants have trashed the property, let it through Airbnb or done a moonlight flit. They’re very lucky. It’s just not worth it. The results are serious damage to the property, large legal costs and often unredeemable damage to your reputation. Why risk it?
Is referencing their core business?
There are now over 50 companies carrying out referencing in our industry. But many aren’t experts, they’re just offering this as an add on business. Referencing is a key risk management tool, not just way to sell more insurance or to simply tick a box. You need experts.
Do they support you in following the Property Ombudsman Code of Practice?
“You must provide the landlord with all relevant facts (subject to data protection restrictions) relating to the application to enable the landlord to make an informed decision regardless of whether the tenant has met or failed to meet the referencing criteria”.
You must be comfortable that the report provided by your credit referencing supplier contains everything. You have to allow your landlord can make an informed decision.
Make sure the solution you choose is cost effective, reliable and well supported. For more information please drop me a line or contact email@example.com.