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21/05/2007
Advice for landlords faced with the problem of tenants who won’t pay up |
September’s student rush delivered tenants to many vacant apartments and, a month or so down the line, landlords should now be enjoying the sweet reward of a rental income from their buy-to-let properties.
But not all of them. Right now, many landlords will be ruefully discovering that they have taken on a tenant who can’t, or won’t, pay the rent. They now face the hassle of taking action to recover the cash and, if necessary, to process an eviction.
Failure by tenants to pay their rent is one of the key risks faced by landlords, but that risk can be reduced. A few simple steps by landlords could protect their investment and give them peace of mind, according to Mairi Scott, managing director of risk consultants Leaseguard who offer specialist insurance and services for tenants and landlords in the rental sector.
“The trick is to carry out ‘tenant referencing’ before you sign the lease. It’s an inexpensive way of checking the financial status of applicants, highlighting any adverse credit history such as CCJ''s, bankruptcies or Voluntary Arrangements. And it can cost as little as £17.55,” she says. "For a small additional cost, landlords can request a reference from the prospective tenant''s employer and their previous landlord."
Leaseguard, who process large volumes of these references say, "Of the checks we do, just over 17% people fail the credit check alone. That’s one in every six people wanting to take out a lease".
Most landlords require that the parents of students stand guarantor for the rent, but it is recommended that a guarantor reference is obtained to check they have the resources to honour the tenancy agreement if the tenant defaults.
And it’s not just students who should be checked out, professional people who are already well into their career should also be referenced. She says “The average age of the people we reference is 35, while the average salary is £20,400 per annum. We see an average rental amount of £516 and this type of person may take accommodation at even higher rents and therefore be more of a risk. If they have a poor credit history or even trashed their previous rented accommodation, this can be identified and reported back before the tenancy agreement is signed."
Leaseguard carries out reference checks on behalf of landlords and letting agents. Results are available within 48 hours and, if tenants pass the reference, landlords qualify for Leaseguard’s Rent Guarantee & Legal Expenses insurance – which covers landlords for interruptions to rental income where the tenant defaults or has broken the tenancy agreement, as well as help with legal advice and eviction costs.
www.leaseguard.co.uk
Ends
For further information, contact: Chris Knight, General Manager, Leaseguard Ltd
Direct Tel no. 01698 368899
Mobile: 07980 626504
E-mail: cknight@leaseguard.co.uk
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