We are about to list a one bed flat in outer Birmingham. We did a lot of work on it once the tenants moved out during lockdown (after 5 years) and we are ready to rent it out
I think you already know the answer to this question. It sounds like you’ve been lucky so far, but I wouldn’t recommend pushing that luck even when covid has passed.
What is the market like there at the moment?
Hi Tanuja, some analysis recently performed by OpenRent suggests that the market it not affected much by local lockdowns, so demand should generally be strong.
Re referencing, it will tell you who is in work or out of work, but if there is any increased risk at the moment, then it is because landlords cannot predict which tenants who are employed will lose their jobs once the furlough scheme is fully withdrawn and businesses lay people off permanently. Referencing won’t tell you this as it can’t predict the future.
If all tenants pass referencing or provide a guarantor who can, you can take out a rent guarantee insurance policy. This is a good reason to reference tenants. Be aware however that RGI policy prices have increased this year due to the higher perception of risk of rent arrears.
So to summarise, referencing is always a good idea, but:
- it won’t tell you if the tenant is about to lose their income
- the insurance policy it gives access to has increased in price across the market
I this climate where it is effectively impossible to evict- you’ll be lucky if it takes less than 6 months- I would be very careful. Either go for a bigger deposit and or charge a higher rent to compensate for the extra risk you are taking by renting now.
We have worked out a good comparable rent now.
I would charge slightly under market rate to get a good choice of tenants so you can pick someone suitable. I believe demand is very different in different areas. It is very high where I am ( SW england) but believe in parts of London it is very weak with people moving out of london. Can only really look at portals and see what your competition is locally.
You are limited to 5 weeks rent for deposit.
Good luck with your new tenant
I have been renting out properties for 15 years, I have 7 properties. I have always used RGI insurance. I think I am very diligent in who I choose to rent to, the result is that I have never had a claim or loss of rent. Now rentguard have TRIPLED my premiums. This is most unjust. Needless to say I have gone elsewhere,but I am annoyed.
As I’ve just said on another post. Yet another reason not to bother with RGI.