Referencing failed on affordability

Landlord Discussion
1

G’day all,

I have a potential tenant whose house got destroyed due to fire. I know this individual as they were my neighbours who have lived in the house (that got destroyed) for 14 years. While the house is being rebuild and repaired, they need to rent.

I carried out the referencing through Open Rent and it has failed on Affordability, both for the tenant and their guarantor. Their insurers will be covering the rent (I have been told). I have asked them for evidence from the Insurer guaranteeing this in the form of a letter.

What options do I have to continue with the tenancy or should I decline? Do I need to notify my Landlord Insurer of this development before agreeing on a tenancy contract? Any other relevant advice or suggestions are highly welcomed.

Thanks
J

2

To be honest I think you already know the answer take the fact that you “know” them oit of the equation what woukd you do then
The referencing is done for a reason if its failed then there is a reason.
Lets say the insurance query something and stop paying or decide they are only going to pay in 1 lump sum at the end of the tennancy (will they wont they) can you afford to take that risk? And to be perfectly honest from what ive read on here theres no shortage of potential tenants so id move on its a shame but you have to put aside that you know them

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3

They do not ‘NEED’ to pass referencing unless you are taking rent protection insurance.

Clearly the referencing of affordability will not include the money which they will receive from the insurers which is likely to be a good amount, and likely in excess of the amount they will pay to you in rent, to cover their other costs.

If you can satisfy yourself that the insurance will be giving them money for the rent, then I do not see the issue.

I am presently renting to a tenant for a very similar reason, Their’s was flood damage, and the only disadvantage to me, is that I expect it to be a short term tenancy (ie only 6-12m).

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4

If the insurer confirms theyre paying until the tenants can return home, I wouldnt have a problem with letting to them.

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5

Thank you all for your replies. I have an email from the loss adjuster for the tenant’s insurer advising that a letter is being typed up from the Insurer setting out the policy cover and how payments will be made during the period Alternative accommodation is required. All moneys will be paid to the tenant by BACS. Based on some of the advice received I have asked for a 3 month advance rent but I do agree with some of the views that there is always going to be a risk element, and unfortunately in this instance it will be all mine without the rent protection insurance.

6

Make all efforts to verify that the letter from the insurer and the email from the loss adjuster are genuine. You really can’t be too careful.

7

I would. What happens if their former property is ready and they refuse to leave. Insurer isn’t going to cover you at that point…

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8

Were they renting that house or did they own it?

9

This is a business transaction and treat us as such
Business and pleasure don’t go together ….
Don’t defecate on your own doorstep ….
Watch nightmare tenants slum landlords for enough examples of this when it goes wrong

10

Or if there is an issue with the policy (like the insurance dispute the claim or an item claimed for) “all payments will cease until such time as this matter is rectified” will THEY then tell YOU “oh by the way we tried claiming for something and theyve stopped the payments”
Also HOW did their house “get destroyed by fire”? Was it THEIR.negelgence do you really want someone who you know has had a house burn down.in.YOUR property