Basic tenant referencing checks may not be sufficient to protect a landlord against the possibility of future arrears, an insurance firm has warned.
Total Landlord Insurance says that in September, 6.4% of tenants were found to have one or more CCJs recorded at an undisclosed address.
While this information shows up in basic reference checks – which verifies that the tenant is who they say they are and highlights any background information about the tenant’s history – the firm says a far more alarming picture emerges from full referencing checks.
For example, in the first half of 2012, the firm found that 23% of self-employed applicants were unable to provide tax returns or acceptable proof of income and 51 applicants had provided false employment details.
Eddie Hooker, CEO of Total Landlord Insurance, said: “More comprehensive checks will not only reveal this information but also obtain previous landlord and letting agent references where available.”
He said landlords, or their agents, should undertake more scrupulous checking of their tenants to protect their investment and income streams.
Hooker said: “In much the same way mortgage lenders have become more stringent with their lending to ensure borrowers are able to meet repayments, landlords should act in a similar fashion to ensure that the tenant can meet their obligations.
“High unemployment and stagnant wages are making conditions particularly tough on those having to rent, with rent in many areas at peak levels, but it makes no business sense for a landlord to rely on an income from someone who is not financially stable.
“There is no guarantee that thoroughly screening a potential tenant will avoid taking on a future problem, but it should be the starting point for all landlords.”
Article courtesy of Landlord Today