Your letting/estate agent contacts you with some great news, they’ve found a tenant for your property and they’ve just passed referencing.
“Great,” you say “go ahead and move them in”, but do you ever ask your agent exactly what criteria they have been referenced against? probably not!!!
In my 20 + years in the lettings industry, I’ve noticed the criteria used by referencing companies to ascertain a tenant’s suitability, fall dramatically. One reason for this, referencing companies are actually being asked (I have this on good authority from the MD of one of the UK’s biggest referencing firms) by some of the country’s biggest agents to water down checks so that they can get more potential applicants through!
Most agents take an extremely short term view on the whole tenant referencing process, to most it’s just a tick box exercise to get someone into a property so they can hit that month’s target! There seems to be little or no consideration of the applicants long term financial suitability, are they working in a sector at risk of redundancies, have the finances of the company they work for been thoroughly checked out? It’s all well and good the boss confirming they get £25k per annum, but what if that company is about to go bust!
Letting agents also fail to make use of the internet, simply type a prospective tenants name into Google and it’s incredible what comes up, social media accounts, court records, newspaper articles and more. I can’t count the number of times we’ve received references back from a referencing company showing someone has passed only to do our own research and realise we’ve dodged a bullet!!!
Referencing a tenant should be viewed in the same way as interviewing someone for a job and the same levels of due diligence should be involved, as if it goes wrong it’s a nightmare for you the agent and the landlord.
How do I know this approach works? Easthams & Co have only had 2 tenants leave in arrears in the last 10 years and across thousands of tenancies!!! Yes, no agent is immune to bad tenants or rent arrears but taking a more thorough approach to referencing massively improves the odds in favour of the landlord and agent.
Next time you’re renting out your property ask your agent what checks they do to make sure they pick the best possible tenant for your property.