Landlord Responsibilities #2: how to choose tenants checklist

Our users tell us that one of their main worries as landlords is to stay on top of their legal responsibilities. We wanted to help, so we’ve asked Tessa Shepperson at Landlord Law Services to come to the rescue with a “how to rent checklist”.

how to choose tenants checklist
Image by StockSnap from Pixabay

The result is the “Landlord duties” series, five articles to provide guidance for landlords at different stages of their tenancy. Each article is an abbreviated version of the content available on Landlord Law Services: if you want to delve deeper, you can access the full content by signing up to their service.

This second article is about how to choose tenants.


Choosing new tenants

One of the things all landlords will agree on is that it’s really, really important to have a good tenant.

If you have a good tenant, someone honest and responsible, you can work together to solve most issues amicably. However, if you have a bad tenant, someone who is feckless and unreliable, you’ll have endless problems.

That’s why you should take enormous care when choosing your tenants. It’s not uncommon to hear of landlords just taking the first person who applies, without doing any checking. How can you just take their word for it? Always, always do your checks.

This is particularly important at this time as legal action against any unsuitable tenants will take you considerably longer than usual due to the delays following on from the COVID-19 stay in March-September 2020.

For many landlords, it’ll be the letting agent who finds and checks tenants, and many landlords use agents ‘find only’ service and then manage their properties themselves. However be aware that although some agents do a really good job, others do not.

When I practised as a solicitor doing eviction work, we often found that the tenant being evicted had not been properly checked by the agents. So, insist on seeing the referencing material before agreeing to let to the tenant found by your agents, and remember that they don’t have the incentive that you do to get things right!

Here is a guide to what you need to do.

Prepare your tenant information form (and refresh it from time to time)

You should always get information from applicants about themselves and their circumstances. The best way to do this is to get them to fill in a form.

This should be pretty detailed and include as a minimum the following information:

  • Personal details such as their name, date of birth, current and previous addresses, ID information (such as their National Insurance, driving license and passport numbers), and employment details;
  • Previous addresses during the past 3 years;
  • Things that will affect their use of the property such as whether they are a smoker, keep a pet or own a car;
  • Their bank account details;
  • The name and address of their next of kin;
  • Whether they have any criminal convictions (this information will be required by your insurer).

You will find a number of standard forms around, both paid for and for free on the internet. Landlord Law members have access to one. 

However, you should adapt the form to suit your own purposes. You will no doubt have other things you want to ask – either following on from problems you’ve experienced in the past or things specific to the type of property you’re renting out.

You may also want to speak to your referencing company to see what questions they ask and adapt your form to reflect this. You’ll then be able to see easily if they have told any lies (this is important as if they’ve lied to you, this will justify retaining the holding deposit). For more on this take a look at the video clip of David Cox’s talk below:

Your tenant application form should be constantly evolving and make sure you update it whenever you find something else you need to know.

Consumer Law issues

It’s important that you are totally honest at all times and do not misrepresent the property.

Failing to do this can lead to penalties including the right in some circumstances for tenants to end the tenancy early and reclaim all payments made (under the ‘unwinding’ rules in the Consumer Rights Act 2015). 

The type of tenant

The tenants you choose and the type of referencing you carry out may depend on the type of property and the sort of tenants you are looking for. For example:

  • Limited companies – be aware that companies can be dissolved leaving creditors without resources, so always take a guarantee from one of the directors (unless the company clearly is going to be good for your rent);
  • Students – the student market is a bit of a specialist area. The main thing is to be sure to have at least one parental (or other) guarantee; 
  • Tenants on benefit – note that there has been a recent (county court) case which found that blanket ‘No DSS’ prohibitions against ‘benefit tenants’ are illegal. So always have a valid reason unconnected with the tenant’s receipt of benefit for choosing a different applicant;
  • ‘Rent to rent’ tenants – if someone wants to rent your property for the purpose of subletting to other occupiers, be aware that this cannot be an assured shorthold tenancy, or indeed a residential tenancy, as your tenant will not be living at the property. You need to be very careful about this type of letting and take legal advice before signing any documentation. If this is something you’re considering, you should definitely attend Landlord Law’s Rent to Rent Training.

The documentation you need to provide

Most documents are provided at the time of granting the tenancy, but note that at this stage you should provide:

  • An Energy Performance Certificate, and (ideally)
  • Your Data Protection Notice

How to choose tenants

Have a meeting

This is always a good idea (if possible – during these COVID-19 times it may not be) as you can get a ‘feel’ for whether they will be a good tenant or not. It’s also a good opportunity to get them to sign the various letters of consent you’ll need from them when taking references.

Check their identity and right to rent

You are required to carry out a ‘right to rent’ check for the government for all occupiers (i.e. not just the tenants) who are over 18, and these checks need to be done before the tenants sign the tenancy agreement. 

You also need to be satisfied yourself that they’re who they say they are.

Here are some things to watch out for:

  • Make sure there are no discrepancies in the paperwork and that all the dates match;
  • Check that the photo ID (if any) looks like the person before you;
  • Be suspicious if the paperwork is very crumpled – is this to disguise the fact that it is forged?

Double-check everything

It’s best to assume that all information provided is a lie until you have verified it independently.

  • Check out their employer on the internet and make sure any telephone number provided really is the number of the employer (and not the number of the applicant’s friend);
  • Take a look at the employer’s website and see if any referees named are shown there;
  • Any limited companies can be checked via Companies House;
  • Type the telephone numbers provided into Google and see what comes up.

Remember – scammers can be very persuasive, that’s their job. Your job is to make sure that everything checks out.

Do online checks

You may be surprised at what you find. This is not a breach of data protection so long as you only view open-access information and do not hack into their private accounts.

Always check out:

  • Google;
  • Facebook;
  • Twitter;
  • LinkedIn.

However, be aware that people have similar names – so make sure that John Smith on Facebook who has rowdy parties and two Alsatian dogs is the same John Smith who has applied for your tenancy.

Credit checks

If you’re checking applicants out yourself, this is the only thing that you need to pay for – but it’s important. You don’t want to let to someone who’s trailed by a string of County Court Judgements.

However, do not JUST rely on the credit check report – as they’re not always reliable. Carry out your own checks too.

If you don’t know which reference company to choose, your insurers will probably be able to recommend someone, or if you’re a member of a Landlords Association, they may have a special deal with certain firms.

Bank statements

This next item tends to be wildly unpopular with tenants but is a justified ask. You need to see the applicants last three bank statements – so you can check that they can actually afford the property.

Tenants often say that this request is not justified and is a breach of the data protection rules. That is not the case – if the tenants voluntarily provide the statements this cannot be a data breach (unless you lose them or make them public).

If tenants object you can tell them that they are perfectly within their rights to refuse to provide the statements. However, you are then within your rights to refuse to entertain their application any further.

Taking references

This is often skipped by landlords as being too much bother, but it should be done. For example, a bank reference will at least confirm that they have a bank account! An employers reference is important as they’ll effectively be paying the rent.

Note though that some references need to be treated with caution, for example, personal references and current landlords who may be desperate to get rid of them.

Note that Landlord Law members will find a number of draft letters and documents in our checking and referencing guide.

And finally

If you follow the guidelines above you should cover most basics. But note also the following:

Be suspicious of applicants who offer to pay large sums up front, particularly if they seem unwilling to allow you to carry out regular inspections. Offering cash upfront is a classic sign of criminals looking for a place to run illegal operations (i.e. start a cannabis farm). This is far more common than most people realise.

Be careful also of anyone wanting you to pay out against a cheque which has not yet cleared. If payment is made by cheque always wait for it to clear properly before acting on it.

Be wary of ‘desperate’ tenants – who are so desperate that they want you to let them in before your referencing is complete. These generally turn out to be nightmare tenants. No matter how sorry you feel for them, don’t let them in until you have checked them out.

If you are not sure about an applicant, many landlords make an excuse to visit them in their current accommodation. This will often resolve your doubts. However, this may not be feasible or appropriate in these COVID-19 times. 

If a tenant looks all right on paper but you feel uneasy – be very careful. Never let to any tenant unless you are 100% happy with them. Remember – in the current circumstances, litigation could take a year or more to be resolved in court.

The next post in this series will be on setting up a tenancy.

Tessa Shepperson is a solicitor and runs the legal information service Landlord Law at landlordlaw.co.uk. She also writes the Landlord Law Blog.

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