Tenant referencing increasingly common

This article was first published on the Total Landlord Insurance website.

Collecting references from tenants’ former landlords could be a good way for owners of buy-to-let properties to avoid having to claim on their let home insurance.

Getting reliable references will give the property owner peace of mind that their tenants pay rent on time and are unlikely to damage the property – something which could lead to landlord contents insurance claims.

According to one UK letting agency, there has been a significant rise in the number of landlords seeking references for tenants.

James Davis, chief executive at Upad, said: “There is a growth in the referencing of tenants. It has grown massively. Landlords are wanting to cover themselves should a tenant default for some reason or get into difficulties.”

He said that one of the main concerns landlords have is that the tenant will be unable to pay their rent and so are checking their employment status as well as contacting former landlords.

Indeed, many buy-to-let property owners are collecting references from two former landlords, rather than just one.

“What we are also seeing more of is landlords wanting a reference from not just the last landlord, but the one before that,” said Mr Davis.

“The last landlord is potentially going to give a good reference just to get rid of that person, so there is an argument that you should go two back.”

Landlords are increasingly able to be choosey about which tenants they take on because of the soaring demand for private rented accommodation driven by people being priced out of the housing market.

Recent research by Templeton LPA also found that this is resulting them being quicker to remove tenants who fall into rent arrears.

“With demand so strong for rental properties, and rental income providing the lion’s share of annual return at present, many landlords are becoming less lenient with arrears and seeking court orders to remove non-paying tenants before they themselves fall into mortgage arrears,” said the firm.

Posted by Lisa Evans