Screening, tenant verifying and selecting tenants is probably the most important task a landlord or agent ever does. It's both a skill and a routine that are well worth developing.
The best way to avoid problems with tenants is to avoid taking on problem tenants in the first place.
TenantVERIFY® checks which include Credit Checks and References are very important parts of the screening process.
In these times of increasing identity fraud it's also very important to carry out thorough Identity Checks
The successful landlord will eliminate 95% plus of all letting problems through careful screening and selection of tenants.
Landlords are always anxious when they have a property vacant and want to fill the vacancy as fast as possible, but always remember this: no tenant at all is 100 times better that a bad one!
You won't know the full significance of this statement until you have experienced the grief of a really bad tenant for yourself.
In our experience of letting property for more than 25 years, probably 95% plus of residential tenants (working and professional) are decent, clean living individuals who pay their rent on time, follow reasonable rules and look after your property. It's just the other 5% or less (one in 20 or less) that cause us landlords the headaches and the sleepless nights.
A detailed and systematic screening process will eliminate most of these, but you must be disciplined in the way you apply the rules - follow them to the letter and absolutely no exceptions.
The first time you do make an exception for someone, Sod's Law says you'll regret it.
Remember, the discrimination laws. You are not allowed to discriminate (and nor would any reasonable landlord want to) on the basis of age, race, religion, gender or disability etc. However, you ARE allowed to discriminate on the merits of the individual/s as qualifying tenants.
If a complaint is made against you on discrimination grounds you need evidence to show that you went through a systematic selection process, giving each applicant a fair chance to qualify and taking on the first one that does fully qualify. Application forms, check lists and tenant checks are very good evidence of this. Keep all confidential paperwork safe and secure for future reference.
The first screening process is the advertisement. You may be surprised at this. The advertisement a device for screening tenants? After all the advertisement is designed to attract tenants, not repel them?
Well, there's absolutely no sense in attracting individuals, and having them view the property, only to reject them as unsuitable, wasting your time and theirs.
Your property and its location will determine where you are in the letting market: (1) upper end (luxury) (2) middle ground (working and professionals) or (3) bottom end, being unemployed and DSS (Housing Benefit), HMOs (Houses in Multiple Occupation) and Student lets. In all three categories it might mean letting to individuals, sharers or families?
Your advertisement should be worded so as to clearly target and attract the clientele that you are looking for, whilst making it very clear to others that they need not apply.
As most landlords and many agents use the local press for their advertising, so it's well worth your while developing skills in writing advertising copy - take notice of how others are doing it and pick out the best examples.
You may also consider using a Letting Board and Internet Advertising. Letting boards can have links to a web page which gives full details of the property including photographs.
By having a link to a web page you save money when advertising - you can keep the advertisement short, while still giving plenty of information on your web page.
Very often your first contact with the prospective tenant is by telephone. Just like advertising, telephone technique is a skill in its own right, and again, for landlords and agents, well worth developing.
You need some pre-prepared details - a checklist - ready to quickly but comprehensively describe the property and the letting arrangements: location, amenities, facilities in the property, rent and rent payments, deposit - putting the property in the best possible light as does you advertisement.
You also need a set of qualifying questions for the prospective tenant: Name, address, telephone number (home & mobile) reason for moving, employment, date required and length of stay, number of people, children ?, pets?, smoking?, credit checks and other references.
It is unlikely that anyone who struggles to answer your questions, or becomes agitated or annoyed, providing you put them in a polite way, will qualify for the property.
A serious tenant will be anxious to answer all your questions correctly and the whole process will save you both time and trouble later.
There are always a few who will go through the process and fail to show for the viewing. You are left waiting and fuming at the property. This is unlikely to happen if you have all the person's contact details - a mobile number is a bonus if they get lost on the way.
Experienced landlords and agents will develop their own style when showing prospective tenants a property. Be positive about the property and emphasise its good points.
While you're selling the property's merits, now is your opportunity to observe and learn about the prospect.
Tell-tale signs are there for the observing:
1 - Reliability - did they turn up on time, unless they had a good reason to be late.
2 - Observe the prospect's car - is it clean and tidy?
3 - Personal appearance - is the person smart and clean and did they make an attempt to make a good impression?
4 - Attitude - is the individual polite and respectful both of the landlord/agent and the property. Care with wiping their feet before entering, handling possessions and furnishings, not smoking.
5 - Tenant's positive or negative reactions to the property, its facilities and to letting arrangements?
6 - Decision Time. Very often if a prospect is genuinely interested they will be 99% able to make a decision there and then. They won't want to leave it too long in case they lose the accommodation. Are they able to fill out an application form there and then or very soon after? Can they leave a refundable holding deposit?
Often singles will bring along a relative or a friend, especially young people. You will have the opportunity to talk to the relative/friend and observe them as well. You may require a surety agreement from the relative willing to stand as guarantor - point this out to them.
Any one of these aspects in itself may not be sufficient to judge, but you will build-up a complete picture from all of them, especially when you do the credit checks and referencing.
Always have an application form with you and a receipt book for any cash holding deposits taken, and a holding deposit agreement to spell out exactly what happens to the holding deposit if the prospective tenant defaults.
By taking a holding deposit you agree to remove the property from the market pending assessment of the application form and further checks. You can still take details of further enquiries, but the prospect gets it providing everything is OK.
Don't take a holding deposit which is too big because the prospect forfeits this if they back-out. If they are successful the holding deposit is applied to the damage deposit or the first month's rent.
Both parties will appreciate quick action particularly if the property is vacant - don't waste days waiting for mail to arrive. If your initial reaction to prospects is positive take a holding deposit and pursue your checks quickly. With TenantVERIFY® speed of turn around is our main priority.
You must use a comprehensive application form. Inform the prospect that it is very important that all sections of the form are completed and that one form is needed for each adult occupant.
A Tenant's Application Form (Tenancy Proposal Form) is crucial and the most important document after the lease agreement.The application form records permanently the tenant's declaration as to identity, accommodation and employment histories, income status, references, and personal details - Smoker? Pets? Other Occupants, Children etc.
It also confirms the tenant's understanding of the property to be let, the type and length of tenancy and basic terms, the costs and expenses to be paid and the rent and deposit required.This form is an important document which forms the basis of the tenant screening process.
It should provide sufficient information to enable the landlord to contact the tenant, or his relatives, even if he absconds.
The Application Form is also very important should you have problems with the tenant later: if any information provided on the form turns out to be false the tenancy can be legally terminated under Ground 17 (Housing Act 1988 /1996) - obtaining a tenancy based on False Information.
It also clearly informs the tenant that credit checks and references checks will be made in accordance with the 1988 Data Protection Act and your prospect agrees to this by signing the form.
Inform the prospect that the form should be returned as soon as possible so that references can be taken up quickly and a credit check carried out.
We strongly recommend that credit checks are always carried out. You may wish to charge the prospect an administration fee for this process, in which case the form should state this.
Tell your prospects that their application will be considered along with others so it's very important that the information is complete, in order to speed up the process.
Look for warning signs and inconsistencies in the information given - does it all add up?
If you don't use us to do a Comprehensive check take up the references yourself: Employers and Previous Landlords or Agents if possible. Always try to verify the references by telephone - you would not be the first landlord to be presented with a fake reference, and people will often give more candid opinions when you speak to them on the telephone.
Be aware that the current landlord could be wanting rid of your prospect and may give a glowing reference regardless.
Make a decision. This, in the end comes down to your own judgment of all the factors and your gut feeling about the individual. Are you a good judge of character? You'll soon find out!
Try not to waste too much time in this process - you may lose a good prospect. Try to do as much as possible over the telephone rather than wasting days waiting for letters to arrive.
Once you have decided, inform the prospect that they have been successful in meeting your requirements ahead of the other prospects - most people will be happy and relieved that they have qualified and will want to go through with it quickly.
Don't relax too soon though - you should still be taking enquiries until your first qualified tenant actually signs the agreement - keep your eyes and ears open!
Remind the prospect to bring along the necessary documents, identification and a Surety (Guarantor), if appropriate, to the agreement signing - normally done at the property, so that the inventory and meter readings can be taken. Use a good Check-in Check List.
Remind the prospect about the rent and deposit required and if you require cash - most landlords and agents would wait for cheques to clear before handing over the keys.
NEVER, ever bow to pressure from prospects to go into the property early or without completing the check-in process and signing the agreement - if you do you're guaranteed you will regret it.
Remember to inform those prospects you have turned down - be prepared to justify on factual grounds why you turned them down. Remember to keep all your records as evidence, should you subsequently be accused of discrimination.
Use a quality agreement - not a newsagent's shelf one. You can buy good quality up-to-date agreements meeting Office of Fair Trading guidelines from the LandlordZONE® Directory or legal stationers in most big towns and cities.
Alternatively you can have a custom agreement prepared by a solicitor - preferably one who has some expertise in Landlord and Tenant matters. This is not really necessary with straightforward residential lettings, but it is important for commercial lettings.
Finally, having completed the inventory (schedule of condition which could ideally include photographic evidence) go through the contents of the agreement with the prospect. It's a good idea to send the prospect a copy of the agreement so they can study it beforehand.
You both need to be clear about respective obligations and rights.
During these final stages observe the tenant's reactions and attitude to the terms of the agreement and the charges etc.
All being well the prospect will be happy with what you have said and the agreement terms, but be prepared to pull out, even at the eleventh hour.
Make absolutely sure your paperwork is in order before signing the agreement, one tiny error on a date or other details can be disastrous where legal documents are concerned.
Verify the prospect's identification and have an independent witness present to sign the document if you can, though this is not absolutely necessary.
Given the difficulty sometimes encountered serving notices, some landlords like to serve the two-month's possession notice (s21 Notice) at the agreement signing stage - well worth considering - but remember, always sign the tenancy agreement first and get a receipt of service.
Signing the lease and completing an inventory are not the only considerations on check-in. It's a really good idea to have a Check-In Check-Out Checklist so you don't forget anything.
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