Avoiding bad tenants

How can first time landlords avoid bad tenants?

There are no guarantees even if you do the most thorough tenant screening available. There are plenty of services available providing credit checks and reference processing. But it’s a mistake to reply soley on these just as much as it’s an error to rely only on your gut feeling. You’ve been let down by tenants we found ourselves and by tenants who passed an agent’s expensive screening process.

Now when it comes to finding tenants we listen to our gut feeling and do background and financial checks. Our list is by no means perfect but this is the information we like to have for each tenant:

3 months bank statments*

list of debts / credit check

verbal landlord reference, preferably not from current landlord

employers verbal reference

meeting with tenant in current property

*as you are processing personal data you must understand your obligations under the Data Protection Act, and whether you need to regsiter with the Information Commissioners Office. You don’t need to notify if all processing is done off line.

What’s important is whether the tenant can afford the rent.

Oh, and as a rule of thumb we would suggest first time landlords avoid tenants who don’t have bank accounts.

Much is written about whether to avoid tenants in receipt of Housing Benefit. Some landlords will not accept this type of tenant. But avoiding housing benefit tenants doesn’t mean you won’t have a bad experience. These days all types of tenants are under financial pressure. Housing benefit is being cut. Working tenants have their over time reduced or lose their jobs.

It’s also possible your property may only attract one kind of tenant leaving you with no choice but to choose someone on benefit.

Finding a good tenant doesn’t mean you’ll never have a late or missed rent payment, but it does mean that the tenant will stay in touch and keep your home in good condition.

What type of tenants do we choose? For our properties let to housing benefit tenants we tend to choose single mums on good terms with their ex-partners i.e. providing financial support who have a reason to live in the area.

For working tenants we tend to prefer couples where both parties work. In any event it’s always worth doing a calculation to see what will happen if a working tenant loses their job. Is housing benefit likely to cover the rent?

Staying in touch with tenants – without being a pest – also minimises future problems. Avoiding bad tenants comes down to judgement and processes, although you can never guarantee you won’t have a problem.