The London lettings market is more competitive than ever – with around 30 applicants chasing every rental property, according to recent figures. Rents are rising and there’s a shortage of suitable properties, with south east London an area of intense demand.
While the situation piles the pressure on tenants looking to move, you might think it means good news for landlords. It’s true that you shouldn’t have a problem finding tenants for your property in London Bridge, Bermondsey or Borough. But it does mean you’ll have decisions to make, as you agonize over a pool of equally suitable candidates.
Ultimately, you’re looking to find someone who will pay their rent on time, look after the home and stay there for as long as possible. No amount of background checks and referencing can ensure things work out, but they can give you a good chance of finding the perfect tenant.
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If you’re wondering how to choose a tenant for your south east London property, or have just become a landlord, we have plenty of experience of checking, screening and choosing tenants in today’s market. Here are our top tips for getting it right:
The first stage in how to choose a tenant is the screening process. This is about checking that an applicant has the stable income to be able to pay the rent each month.
You’ll be looking for evidence of payslips and bank statements to prove their income, and references from employers to show they’re in permanent employment.
It’s often quoted that the tenant’s annual salary should be 30x their monthly rent, to be able to comfortably afford the payments.
Want to be a more informed landlord? Good tenant selection means understanding what happens when a tenant reference check fails and how long tenant referencing takes.
You’ll need to do background checks too. This means tenancy references from previous landlords which show that they paid the rent on time, weren’t evicted for any reason, didn’t cause a nuisance and looked after the property properly. Don’t take any risks by accepting this information on face value – call the referees and ask plenty of questions.
If you’re letting to students or young people, who haven’t rented before, you may need to ask a college teacher or employer as you won‘t be able to get landlord references. You could also consider a guarantor who will take responsibility for paying the rent if the tenant defaults.
You can also find out about the applicant’s financial history with a credit check by a company such as Experian or Equifax. You will need to get the tenant’s permission first.
Using the tenant’s personal details, the credit referencing agency will run an automated check that will bring up the credit history and create a report.
Anyone renting out property in England must carry out right to rent checks of certain identity documents to ensure that their prospective tenant’s immigration status gives them the right to rent in the UK.
This includes checking the passport, driving licence or birth certificate for UK and Irish citizens. For non-UK and Irish citizens, landlords must check the immigration status of tenants on the Home Office online service. The checks are required for all tenants aged 18 and above, even if they are not included in the tenancy agreement.
This is a legal requirement for landlords and failure to comply can result in fines and even imprisonment.
Read more about the steps you must take on the gov.uk website.
A good way to increase your pool of prospective tenants is to develop your online and offline reputation as a landlord.
You should try to cultivate positive tenant referrals and online reviews by maintaining good relationships with tenants, so that they leave good reviews and recommend property vacancies to people they know.
Once you’ve carried out all the important background and financial checks, chances are you’ll still be left with a pool of suitable tenants. You can’t give them all the tenancy, so you’ll have to find ways to decide who is your best prospect.
While you can’t see into the future to see whether a tenant will turn out to be reliable, there are some factors to consider that will help you to identify tenants that are more likely to be ‘good tenants’. These are:
In this competitive market, one tenant may offer a higher rent than the others. If maximising income is a priority for you, you may choose the highest bidder, but remember that money isn’t everything. A tenant who becomes a problem later on may cost you more in missed rental payments or damage to the property.
Landlords should be aware that the Renter’s Rights Bill will make it illegal for landlords to create bidding wars and that the advertised rental price cannot be adjusted.
There are different schools of thought on this. A tenant who agrees to pay a few months’ rent in advance may seem like a good option, showing commitment to the property and that they’re less likely to default.
Unfortunately, this can also be a sign of someone looking to use the property for criminal activity – so weigh up their plus points against the evidence and your gut feeling.
Your earlier tenant reference checks will go some way to finding out how well your applicant looked after their previous rentals, but this won’t necessarily give you the whole story.
Meeting them in person, is one way of getting a feel for their attitude and how responsible they seem.
Another way of checking them out is using a Google search – just make sure you’re looking at the right John or Jane Smith! Check social media too – many people have public accounts and looking at their Facebook, Instagram and Twitter posts will give you a sense of their lifestyle, while LinkedIn will help confirm their employment status.
Do their accounts reveal whether they are they party animals who like to play host or do they have pets they haven’t mentioned?
No landlord likes to go through this process too often, so you might wish to prioritise candidates who are willing to sign up for a longer contract. Another tenant may be ready to move in more quickly – which might also be beneficial.
In addition to all these checks, it is always worth meeting applicants in person and trying to get to know them. You will develop a professional relationship with them as landlord and tenant, so you will need to establish that rapport.
Go with your instincts when you meet them – if something doesn’t seem right, be wary. You don’t want a tenant who damages your property or later defaults on rent.
Remember that while it’s perfectly fine for you to decide on the best tenant for your property, you can’t discriminate against applicants on the basis of protected characteristics such as race, sex, sexual orientation, religion or disability. Read more on the gov.uk website.
Don’t forget checking your tenant’s right to rent, and if the process feels like a lot, look into how to choose a letting agent to help.
If you have a good selection of tenants who want to move into your rental property, you have the luxury of being able to pick the one that is most likely to be the best tenant.
To help assess who would potentially make a good tenant, you can ask the following questions:
By asking this question, you should be able to reveal whether they have had problems with previous landlords. For example, if they struggle to give a reasonable answer for this or provide an unexpected answer. The most reasonable answers to this question are reasons like improving commuting time, needing more space or wanting a garden.
Financially, finding a tenant who can move in immediately after your previous tenant moves out will be best. If your prospective tenant is not looking to move for a while, you will lose rental income during the vacant period.
However, a tenant who wants to move in immediately could be a warning sign that they have been evicted or are breaking their tenancy agreement.
When the Renters Rights Bill eventually comes into force, landlords will not be able to unreasonably refuse to have a pet in the property.
However, if you are concerned about pets damaging your property, asking more information about their pets can help to build a better picture of what you can expect.
If the person has lived in a rental property for a good length of time, this is a good indication that they like to settle in one place and that they have had a good relationship with their previous landlord.
Finding out about the prospective tenant’s work will help gauge whether they have a stable job. If they have been doing the same job for a while and give the impression that they enjoy it, this will hopefully mean they will be there for the long term, with a steady income to pay their rent with.
Asking this question will help to identify whether your property will be a good fit for the tenant and how long they might intend to be in the property. For example, if they are looking for good local schools, this indicates that they have long-term plans to live there.
Tenants who are familiar with the local area and have either lived here before or have been planning to move into the area for a while, are more likely to stay for a longer period.
You should also ask how many people will be living in the property to ensure that there is adequate space and that you adhere with any occupancy limit regulations.
Ask the tenant how much monthly income they have so that you can be sure that they will be able to afford the rent. A check of this will be included in the tenant screening process but there is nothing stopping you from asking this question beforehand to ensure you don’t end up wasting time.
If this all sounds like a bit of a headache, you have the option of outsourcing tenant selection. You can use a professional tenant referencing service to do some of the legwork, or you can use a letting agent to find a reliable tenant for you. This is a good idea for landlords who are too busy with their day job, or who don’t live close to the property.
Letting agents are experts, with plenty of experience in how to find tenants for a rental property so this option might also work for you if you’re a new landlord or don’t feel confident about sifting through all the applications yourself.
To protect yourself against making the wrong choice, you may wish to take out rent guarantee landlord insurance to cover you against non-payment of rent. These policies are likely to require you to complete extensive credit referencing checks first but can give you added peace of mind.
If you’re looking to rent out property in south east London including in London Bridge, Bermondsey or Borough, talk to us. We have plenty of experience of finding the perfect tenants to match local properties. We also offer a range of services for landlords including full property management and rent guarantee insurance. Get in touch today.
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Lee Whitelock
Director
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