Letting Agents and Tenant References and Checks by LettingFocus

Landlords using letting agents to find a tenant for them need to be very careful that they set out EXACTLY what references they expect the letting agent to obtain from the tenant as part of the reference checking process.
Those of you who have read my book “Successful Property Letting” will know that I tend to go a little bit further than most letting agents do in terms of the kind of the references I wish a tenant to provide.
Where the property in question is close to me I still tend to do the “finding tenant” job myself using websites like Upad -see the link at Services and Products for Landlords
I do the viewings myself and then get the tenants to provide the employers and past landlord references plus all necessary documents - which I then validate.
And I ask to see a lot of documentation too – bank statements, utility bills, proof of ID etc.
Plus I do a credit check.

Why Do It Yourself?

Sometimes I am pretty busy on my corporate consulting work and speaking engagements and I sometimes think to myself, “Hey, why am I still doing this myself?”
The answer is complex.
But I find that I can do reference checks a lot faster myself than a letting agent can do it, so I’m not sitting and waiting ages for a “Go” or “NO GO” decision on the tenant.
Plus I get to see all the references the tenants provide, I study them carefully and can make up my own mind as to whether they will be good tenants or not.
And with the stress and cost one has if one gets a tenant from hell, it is really a job that I am loathe to lose control of.

As an example of this, a consultee of mine recently used a letting agent.
The agent had the tenant fill in the application form. But though the tenant was from Korea (and clearly outside the EU) the agent did not think to ask to see the work permit from the Home Office.
Doh! Basic stuff! But all too common a problem, I'm afraid.

Agree What Checks Your Letting Agent Will Do

In this case, the landlord had not agreed in writing exactly what reference checks they wanted the letting agent to do when they had agreed for them to do the work to find the tenant.
It’s an easy mistake to make and one that I have to confess I have made in the past.
I do use letting agents from time to time (and I have to for my properties that are far away because I cannot physically do the viewings.)
However, the letting agency is fully appraised as to what refs I need and he sends me copies of the tenants application form and copies of the references obtained too.
I trust them.
In theory all good letting agents should be as thorough on reference checks as he is.
After all, they should not want to provide you with a duff tenant because that will strain your relationship (or it should!).
But some letting agency staff are blinded by the commission and frankly could not give a monkeys about the quality of the tenant.

Be Wary of Pure Commission Driven Letting Agents

This type of letting agent will have the view that as long as they have ticked the minimum number of boxes as part of the reference checks and have got their commission, they are happy with that.
A letting agency near us has staff that I know are entirely on commission. This is the sort of firm you should be wary of and keep on a tight rein.

Private Rented Sector Policy Is Often Made on the Hoof

As part of the corporate consultancy work I do for mortgage companies and in the social housing sector, I get to read a lot of position papers on the private rented sector.
But I am continually amazed that in the private rented sector, so much government policy is made without the benefit of any good quality research.
Julie Rugg in her superb report into the private rented sector found the same thing.
Policy has been and continues to be made that affects landlords and tenants but which is not rooted in valid research findings.
What research there is, is often limited in scope and uses too small sample sizes.
An example is the proposal to require houses converted to HMOs to obtain planning permission. It may be sensible policy, but where is the research to justify this proposal?
I may come back to this issue another time.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of landlord information.
Hello, I’m David Lawrenson.
I have been a landlord and property investor myself for over 25 years and am author of “Successful Property Letting” – which has been the UK’s top selling commercially published property book for the last 3 years.
Our main business is at a corporate level for organisations - both public and private companies.
We provide consultancy for banks, local authorities, social housing providers and other organisations – helping them with their landlord facing or buy to let product strategies and services.

OTHER WORK

We also write for property websites and are regularly quoted by the media. In addition, we have written articles for numerous publications including The Independent, The Telegraph and quality landlord websites.
For private landlords, we also find some occasional spare time to help landlords and property investors make money in property by coaching them in ways that work, which are ethical and which involve minimal risk to the investor.
We pride ourselves on giving independent unbiased buy to let advice on either a one to one mentoring / coaching basis or through our occasional group seminars.
Unfortunately, in the UK today, property advice in the UK is still largely unregulated and what counts as “good advice” is too often more about making the promoter money than giving useful information to the investor.
With no links to property firms, developers or bridging loan providers we can advise on where and what type of property to buy for investment and when to buy it. We also show you how to manage tenants properly.

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Tenants and Data Protection by David Lawrenson of Letting Focus

As the incidence of credit and ID fraud increases, so landlords have had to collect more and more information on tenants to ensure that they don’t get the tenant from hell.
Only by using a proper referencing system can lanldords be sure that the person standing in front us who wants to rent a house, is really who they say they are and can afford to pay the rent with no hassles.
In my experience most tenant applicants understand this and are happy to provide the information we need to do our credit and reference checks.
In fact, I only had one potential tenant who objected to providing previous utility bills such as proof of past address. Needless to say, I didn’t let to her!

You Need a Thorough Tenants Referencing System
A thorough tenants’ referencing system will deter tenants with a history of not paying their rent and also potential ID fraudsters who will seek an easier, “greener” landlord elsewhere.
But there are laws about what landlords can and can’t do with the information we collect and landlords who abuse the data they hold on tenants can get themselves in trouble.
Fortunately the Information Commissioner (formerly the Data Protection Registrar) sets out some guidance for landlords that explains what landlords can and cannot do with tenant data.
The Information Commissioners says if you use an agent to find a tenant and they obtain references for you, you are entitled to see the references as long as your agent makes it clear to the tenant on the tenant application form or in writing that this will happen.
If the agent says he can’t change his application form or get the tenants’ consent to this, I’d suggest you go to a more amenable agent.

Checking Tenant References Yourself
If you do the referencing yourself, you should always tell tenants what you will do with the information they give you and what credit checks and searches of databases you will do – the key thing is to be clear about how you will use information and not to use information for any purpose that is unreasonable.
Suppose you let out a shared house to say two or more tenants in which each tenant is “jointly and severally” liable to pay the whole rent – i.e. they do not each have individual agreements.
In this case, if one doesn’t pay, you can seek to recover the balance owing from any one of the other tenants (or their guarantors) if they have them.
In these circumstances you would, by implication, be revealing that there was a shortfall in the rent receipts due because one or more tenants have not paid their “share.”
As they are all party to a legal contract, you are perfectly within your rights to do this.

Tracing Agents and Other Third Parties
Other third parties who can be given the tenant details would include debt collection agencies or tracing agents who will need information on money owing to do their job. The Information Commissioner advises landlords to make it clear in the tenancy agreement that this could happen in the event that the tenant leaves with money owing.
Landlords should not give previous tenants’ new address to new occupiers unless the old tenants have requested this happen in writing.
To find out more about referencing tenants and how to find a good tenant ask me.

ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
We are LettingFocus.com - the landlords’ expert and I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property and buy to let book for the last 3 years.
I have been a landlord and property investor myself for over 25 years.
At LettingFocus we offer independent unbiased advice for landlords and property investors on a one to one mentoring and coaching basis as well as occasional group seminars.
Unlike many in the still largely unregulated buy to let and property “advice” business I am not linked to a property company, developer, estate agency or bridging loan provider.
As such I am able to give unbiased independent advice on where to buy (which areas), what type of property to buy, when to buy and how to buy property at a low price. I can also explain how to reduce the risk of getting a bad tenant.
We help you make money in property by showing you the ways that work and which are of minimal risk to you.

CHECK OUT THESE PAGES AT OUR SITE LETTINGFOCUS.COM:
THE HOME PAGE OF THIS BLOG click here: Blog
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ONE TO ONE CONSULTING click here: Property Consulting
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Over on the right hand side under all the previous blog entries you will find a button which says “Site Feed.” Simply copy the site feed link into your News Reader or News Aggregator.
If you have a website & are thinking of reproducing material here, that’s fine but we DO require a link to the blog to be included, including also all the links in this section. (The full article including all links must be available to ALL VIEWERS of your site and not restricted.)
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Copyright: David Lawrenson 2007. This blog is updated once a week
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ID Fraud and how can I avoid becoming a victim? Special Tips for Landlords

Unfortunately, identity theft is a rapidly expanding area of criminality and landlords are a target. A bad tenant can easily steal a landlord’s identity. Also, there is a risk that you could let to someone who is actually using a false identity – someone who will probably pay no rent and be very hard to evict.
All the fraudster needs to do to take out loans or cards in someone else’s name is to get two utility bills. This is easy where personal mail is delivered to an address after the previous residents or the landlord has left. In fact, anyone is vulnerable to this kind of fraud if their post is left in communal areas.
Apart from using the post to get personal details, fraudsters also search bins or pick up information from street surveys or from the Internet.
In a recent extreme case a landlady rented out her own home to a tenant. She left some of her personal documents including title deeds to her house locked away in a room in the house. The tenant used these to impersonate her and tried to sell her property.

False ID
In this case, it also turned out that the tenant had actually used a false identity to pass a basic reference check to get into the property in the first place.
To avoid letting to someone using a false identity, ask each tenant to complete and sign a tenancy application form. This should contain a statement giving permission to carry out credit checks and seek references from employers and previous landlords. The more information collected on the form the better, because should the tenant abscond, it gives vital tracing information.

Tenant References
Check references carefully and call to verify them. Don’t assume the company they say they work for really exists. Anyone can mock up a convincing letterhead! Check with Companies House and on the web.
Ask to see recent utility bills, mobile phone bills and bank statements. Recent bank statements for that person’s current account will prove whether salary is being paid in and acts as an additional check on the employer’s reference.

Original Docs
Also insist on seeing an official original document proving the person’s identity. However, be aware that even official documents like passports can be fraudulent and how can you be sure that the person on that old passport is really the same one that stands in front of you?
Experienced landlords say one way around this is to ask to see the tenant’s last 4 months of bank statements because whilst the odd bank statement can go missing, it’s less likely that an ID fraudster can obtain 4 months of another person’s statements.
Never delegate referencing entirely to an agent. Check that they are doing proper reference checks for you because I know of many landlords who got their “tenant from hell” through a letting agent.
Make sure that your agent calls the person who gave the reference to check what was said because sometimes when you speak to the referee they are not as glowing about the tenant as they were in writing. If in doubt whether the agent did this; do it yourself anyway. A good honest prospective tenant won’t mind being checked out in this way.
In summary, if you use a robust referencing system, you will almost certainly avoid letting to ID fraudsters. They know that they can’t provide the documentation required and will seek a more gullible landlord elsewhere.
My top tips to Avoid Becoming a Victim of ID Fraud are as follows:
1. Check your bank and card statements carefully. Look out for transactions you don’t recognise. 2. Shred unwanted personal documents containing your name and address.
3. Don’t use obvious passwords, like your partner’s first name.
4. When moving, give utility suppliers, banks and the Council Tax people your new address and insist they send all post there. Tell your old tenants to do the same. Use the Royal Mail’s redirection service.
5. When looking for new tenants do a thorough reference check.
6. Anti fraud organisation CIFAS has more advice on how to avoid ID fraud. See http://www.cifas.org.uk/

ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
We are LettingFocus.com - the buy to let experts and I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property and buy to let book for the last 3 years.
We help you make money in property by showing you and coaching you in the ways that work and which are of minimal risk to you.

Property clubs are property advice in the UK is still mainly unregulated and advice is often poor. As I am not linked to a property company, developer, estate agency or bridging loan provider I am able to give unbiased independent advice on where and what type of property to buy for investment, when to buy and how to buy property at a low price.
I can also explain how to reduce the risk of getting a bad tenant.

CHECK OUT THESE PAGES AT OUR SITE LETTINGFOCUS.COM:

THE HOME PAGE OF THIS BLOG click here: Blog
THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors:
Next Property Investing Seminar and Networking Event
We have GREAT OFFERS on a range of products for landlords too, click here: Services and Products for Landlords
For general info on our SEMINARS AND CONSULTING click here: Property Seminars, Networking Evenings and Consulting
ONE TO ONE CONSULTING click here: Property Consulting
CLIENT TESTIMONIALS from past customers click here: Testimonials
BUY THE BOOK click here: Buy the Book at Amazon
Have you seen this article on buying agent and property finders
To JOIN our Free QUARTERLY NEWSLETTER simply send an email to david@LettingFocus.com - Please note we WILL NOT send spam or sell our mailing list to advertisers!

IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR OUR WEBSITE?
Selling services to landlords and property investors and have a national coverage? You could be a partner, please get in touch!

Have you seen this related article? ID Fraud