Before you let your property to new tenants, it’s in your best interest to obtain references for your them. This will help you to avoid any potential risks - e.g. tenants who have defaulted on the rent before, or damaged properties which they have lived in previously.
Additionally, some Landlord Insurance policies may be rendered void if you let to certain types of tenants - as such, obtaining thorough, accurate references from your tenants is essential, as if you do not, it may affect your ability to claim on your insurance policy.
Below are 5 best practices to use when obtaining references for your new tenants:
1) Previous Landlord Reference
Do you know what the person looking to rent the property was like as a tenant previously? Can their previous landlords give them a good reference in terms of regular payments and property maintenance? Were there ever any problems with the tenant during their tenancy period? Furthermore, how long has the tenant been renting for? Are they new to renting or do they have a long history in renting a property?
2) Work References
What is the prospective tenants employment status? Are the prospective tenants able to provide you with work references to validate their employment status, income and employment history?
3) Proof of Income
Can the prospective tenant provide you with income details? Ideal references to check would include wage slips and bank statements. You could then verify the payment consistency along with their working references to show that they have a stable income.
4) Identification Reference (ID)
Are you able to verify that they are who they claim to be? Ideally you need to see a form of ID from a registered authorative source or organisation. Examples include:
- A drivers license from the DVLA
- National Identity Card or Passport
5) Guarantor
In some instances you may want your tenant to have a third party guarantor who you can deal with in the event of rental default. An example of a guarantor may include a family member.
Whilst these best practices go some way to protect yourself against lettings risks, landlords might also consider obtaining additional insurance cover on their property. Rent guarantee insurance will cover you in the event that your tenant is unable to pay their rent, and rent loss insurance will cover you in the event that your property becomes uninhabitable - e.g. as the result of a fire or flood.
This types of insurance may be particularly important if you have a mortgage secured on the property which you are renting out, and are reliant on rental income in order to make your repayments. For further information check out our post on Rent Loss and Rent Guarantee Insurance.
Click here for a competitive quote on your Landlord Insurance.
Image Source: Miss Claeson