I have found seemingly ideal tenants on paper and IRL. Both tenant and guarantor passed credit checks regarding CCJs, debt, electoral roll etc on RN, but failed affordability. I asked for 3 months recent bank statements from them both and references from previous LL and employers. All refs are glowing and I can see from the bank statements that they can afford the rent (£250 pcm cheaper than where tenant is staying now).
My question is, if I were to buy Mudhut rent guarantee insurance, would have problems if a claim arises, because of the fail via Rent Now? They paid for Equifax refs via Mudhut too, which passed.
Or should I just sack RN off and create my own contracts via the www, in case of any contraindications, in the event of a claim?
Unless you are pretty expert in tenancy law, I wouldn’t suggest you go it alone. If you’re not happy with RentNow and you don’t think this is redeemable, then take a look at some of the landlord associations. They have all the model documents and you would be able to buy third party referencing and rent guarantee insurance.
Hi Karl, no you haven’t misunderstood, that is correct. They failed on affordability, but passed everything else and I can see from their last 3 month bank statements that they can afford the rent. I’m still wanting to get rent guarantee insurance as added security though, hence the question. Thanks for your response
I tried to post the link to “Mudhut rent insurance eligibility” page, but its not allowed the link, but if you Google, that must answer the question surely…
Hi David, thank you for your response. I wouldn’t say I’m an expert but I do have a good idea and I rented it out for 12 years, 6 of them by myself with not many problems (apart from when I employed agents, hence going solo). Thanks, I’ll definitely look up the tenant associations, I’ve used them before so thanks for the reminder
Yes I’ve looked at the T+Cs in detail here is the crucial part:
Affordability checks must be carried out on the tenant by the purchaser or a licensed referencing company, which confirms that the tenant has the reasonable means to pay the rent, i.e. that their income, or combined income for tenancies with multiple tenants, is sufficient to pay the agreed rent in full.
I am the purchaser and I’ve checked their bank accounts throroughly, which are all in order. Further, when I sent the Equifax credit reports to Mudhut, they said they looked fine and that I would be covered.
I guess I’m wondering if they would see the Open Rent checks, should I go through RN and then not pay up, in the event of a claim… But I have 3 months bank statements on record as well as everything else I’ve mentioned…
I’m just being super careful as I’m now a single mum and I don’t want anything to bite me, should it all go awry. Before I rented it out for 12 years with no back up plan - I was very lucky that I never got stung, but now I have more at stake, hence the caution
I believe it’s because they have to have 3 x the rental amount in income every month. Most other referencing agencies allow for 2.5. They have x 2. I can see the rent going out of their account every month in the recent bank statements, plus the current LL has given a good reference and also both have excellent credit ratings, so I’m not too concerned. I’m just worried that in the event of a claim, this failure would flag up - you know what insurance companies are like.
That would be a fail for me as it’s 2.5 minimum in my book, and I wouldn’t take the risk. In fact, they wouldn’t have got past the initial phone call where I ask them what their income is.
I assume you’re talking about a couple here and, if so, you need to take into account what happens if they split up and/or one of them loses their job. Do their bank statements show a good cushion of savings, for example?
No wonder tenants are having such difficulties renting when the rents are so high but they’re expected to earn x3 . . It’s virtually impossible for so many good Tennant’s and is total class cleansing!
Such a shame that good tennants have no chance of renting anywhere because of this. Only the wealthy can manage X3 rent these days. Something does need to change. I’m a single parent who is a good tennant and never misse a rent payment but facing homelessness as cannot find anyone who will rent to me because of the having to earn X3 the rent which is 1500 in my area no one earns that except for rich couples. I do an important job in the area where there huge shortages if another one of us has to move far away it will cause a crisis. How can we continue with this unfair system. I think the X3 is currently unfair on so many good tennants.
Rents are usually governed by the market and related to a landlords costs. They’re high because the landlords mortgage is high. I agree that its a problem for low income renters, but the fault is with successive Governments who have not built enough new social housing. The private rented sector is not able to provide properties at so-called “affordable rents”
The how to rent guide, a government generated document, advises circa three times the rent
It’s the same for mortgages
It’s not about class cleansing
It’s about making sure you have enough to live off after you have paid rent
It’s about looking in a budget and living within your means which homeowners also have to do
Banks pose the same question to potential home buyers . They don’t call it class cleansing
This reduces people looking for homes they cannot afford
Until I read that document I never asked the question
A lot of landlords don’t ask the question as they too have never read that document
A lot of tenants have no idea of this and although they have been served the how to rent document have never read it
They don’t realise that 66% of monies going to rent is unsustainable
I have met first time applicants who can only afford a room in a shared house but apply to rent a whole house
I have literally had to explain the maths and tell them to read that document
I have found it a useful parameter and found tenants less likely to default
As a result of the new Renters Rights Bill that the government are introducing, thousands of Landlords are selling up and leaving the market. There is no incentive for new investors to become Landlords and so unfortunately this problem is going to get a lot worse. The private rental sector isn’t a public service, but as government add more and more rules and regulation , councils increase licensing costs and it gets more difficult and costly to regain possession of a property ,many tenants won’t get the chance to rent anywhere. Groups like Shelter who have campaigned for this very situation do not house a single person.
