Renting is much more difficult than it was…

Tenant Discussion
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Just a brief intro as to my situation, before I jump on to the discussion.

I’m 41, Quantity Surveyor, live in Liverpool and my credit score is poor. Why? In my very early 30s, I wasn’t in a great relationship and well, he exploited my generosity and I ended up taking out small loans to help.

Fast forward to today, and my credit score is about 460, across most of the agencies I’ve registered with. I have 1 CCJ, from a debt 8 years ago worth £250, which is due to come off my file in August, I have lived in the same property as my partner (now ex, split up last summer), since 2016. We get on really well and boundaries have been set and stuck to since we split. I haven’t taken out any new loans, debts, in the last six years, and have had the same bank all that time. No defaults in last 6 years so it currently shows as all green boxes, for my bank (I don’t have an overdraft either).

Now to my topic point…

Prior to living with my current partner (private landlord, didn’t do credit check just bank slips and proof of employment), I lived in a lot of house shares. This didn’t bother me as i had been used to living in house shares in my 20s too.

What I am exasperated and disillusioned by, is how much more difficult it is to rent now, then it was say, before 2010. Firstly, I recall openrent being full of private landlords - who did the basic checks of; payslips, references and proof of employment. Now, it’s like applying for for a mortgage! Secondly, there are now MORE agencies on OpenRent, than private landlords, why!? Thought the whole premise of OpenRent was that it was just private landlords? Now, you have multiple agencies renting houses out for £3k a month, for a converted HMO, advertising on here. What the heck happened?

Back to the level of referencing undertaken now by landlords. Yes, I understand you are risk averse, and rightly so, but surely it’s not that hard to establish a tenants credibility thorough payslips, a reference and employment check? What irks me on these agency websites, when talking about employment checks, is that the tenants employer shall give indication that the tenant will likely remain in that job for foreseeable future - who the heck can guarantee that, more so with the way the job markets are these days and, employment t&c’s changjng in the employers favour - to make them more disposable.

This credit reference system has gotten to the point now where it is making it MUCH harder for people to rent. There’s that many agencies now, not all of their records mirror each other (as I have experienced, i a on the electoral roll on one, but not on 2 others?!). It is a nightmare to try and contact them, smoothly, without getting stressed and pest in the process. And there’s so much mixed messaging about the actual score - when a credit check is carried out, do they, or do they not see the score - or just CCJs, IVAs, defaults etc.?

The reason I’m not getting a mortgage is precisely because of my credit score. Why should the process of applying for rent, go under the same scrutiny as if I were applying for a mortgage? It’s obscene, because it takes longer for the bank to repossess and sell on, than it does for a landlord to find a new tenant. So yes, their due diligence should be more intrusive.

Why is it with houseshares tenants don’t get credit checked? What’s to say suddenly all three of those tenants fail to pay? The HMO marker is massive right now, especially with students, so why have I never been credit checked for renting a room, by a landlord?

I’d also like to understand why landlords are freely and happy to rent to students when most don’t work, have no history of paying bills on time, and have no history of how they approach/handle credit. It’s almost like students are favoured MORE than working professionals these last several years, and it genuinely riles me. Are you, as landlords, saying you’re prepared to take the risk with students more than working professionals? Why, I’m intrigued. Is it 1 tenancy for all students in one household, or several different tenancies? I assume you get guarantors for ALL of them then, seeing as most don’t work (irrespective of their student loans, which they could, just blow). Of course you can get more rent with students (have you seen Liverpool market, it’s obscene now, to the point there is a hmo crisis in certain areas, I,e, more students in an area comparably to working professionals).

I am going to view a property today. Private landlord. I emailed to arrange the viewing last week and we have spoke on the phone. After this phone call, it got me thinking ‘am I going to have to undergo a credit check, as my current landlord never did one six years ago for a £200k flat that we live in). Little did I realise, open rent confirmed that a check would be undertaken. My heart sunk, whatever happened to landlords happily seeing payslips, employment contract, references and good old fashioned judgement (I.e. meeting someone in person whom you can tell are working professionals and seem respectable, credible etc). So in my moment of panic, I had to tell the landlord about my credit score, and that I have 1 CCJ due to be removed in August, and explained how the debt came about. He appreciated my honesty and still wanted me to view the property today, which is good news. However, he is now asking for the option of a guarantor and additional weeks rent. Have no issue with the rent (I have £8k in savings), but thr guarantor I can’t do. My parents separated when I was a kid, and one is retired/on benefits, and the other works part time as a security guard on rubbish pay, there is no one else. He mentioned about his insurance, in that, the provider would struggle to indemnify someone as high risk because of the credit score, so hence the guarantor. So, about this insurance he’s referring to……

Is the point of insurance to pay out in the event of a claim, no? So if i defaulted , he could claim on the insurance, or, just find a new tenant (the demand is high here in Liverpool).right? Ok, so say the insurer says to him, his premium will go up - I’d be happy to pay the difference. I understand tenant insurance for rent default is not statutory, which must be the cast because my current landlord never asked for a guarantor (he just wanted payslips, proof of employment, as iterated).

The whole reason I went to OoenRent is because I honestly thought , maybe ignorantly so, that I went through less due diligence than going through a letting agency. I have been avoiding agencies, precisely because I knew I’d have to get a credit check. Ok, so this landlord I have been speaking to will be doing one, fine, and I have explained before he carried out why it will fail, yet he then proceeds to ask for a guarantor - which is exactly what agencies do anyway! I miss the days we had lots of private landlords who would carry out sufficient checks without resorting to credit checks and asking for guarantors, I mean come on, the demand is SO high for rentals right now, you’d be able to get a tenant in within a week! If a tenant didn’t pay their rent, then it’s PRECISELY why you have a deposit - as security for loss! So not only do you want a deposit, to cover for that loss, AND you have insurance, but you also want a guarantor - I don’t get it! Ok, ask me for a bigger deposit then, but there is absolutely zero need to be asking for guarantors aswell. If I give you a bigger deposit to cover a couple of months of no rent (if it happens), plus, payslips, bank statement, employer contract and employer defences , why are you asking for a guarantor aswell?

Granted, it’s my responsibility to ensure I show good financial management, and that I have done for six years, but I am being punished for a debt that was over six years ago, when I was a different person back then.

For crying out loud. I’m a Quantity Surveyor with a good job, with a top Tier 1 contractor, no loans, credit cards or overdraft the last six years, can provide a deposit equivalent to three months rent and all paperwork which proves that. Yet, landlords will happily just rent their property to students. I don’t get it,

I’m sorry for venting I just feel really disillusioned, frustrated, hurt and penalised right now. I know all of you just want to cover your mortgage payments with some wanting to make a profit, but, seriously, what has the market come to the last ten years? My home is defined by a number - my fate is defined and determined by a number that agencies and landlords use, instead of just asking for all the paperwork, and not judging ‘me’ by a system (credit check) which determines whether someone can get a home or not.

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I think one of the reasons landlords are more risk averse at the moment is the massive price rises we’re all going to face in the coming year. I think people in general are in denial about this, but I think come next winter it’s really going to bite hard. So whereas in the past I would have considered someone earning 2.5 times rent i.e. the minimum affordability, now I suspect they’re going to struggle, particularly if they’ve got children to support.

I’d say you raise a valid point about credit checks, landlords should try and intelligently interpret the story they reveal with rather than just take a “computer says no” attitude. Full marks to you for being upfront with your application though, and it’s a shame the guarantor things has come into it. Particularly as it’s only because of the landlord getting RGI - I don’t have direct experience but I’ve heard neither guarantors nor RGI can be totally relied on anyway, if things go wrong.

If it’s any comfort, things are not great from the other side of the fance too at the moment. I currently have a property for rent, and get so many lies from applicants that it’s gradually destroying my faith in human decency, but perhaps it’s just a reflection of how much more desperate people are becoming.

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As a landlord, I don’t think it helps that things are so biased in favour of the tenant. I get why, but there needs to be a balance.

If a tenant doesn’t pay, it can take months to get them out and there is nothing the landlord can do. Deposits are limited to 5 weeks now, so that’s not much protection - especially if a tenant just doesn’t pay the last month’s rent (which I have had happen).

If the tenant trashes the place, there is nothing you can do apart from sue them, and, chances are, if they are the sort that would trash their home, they won’t have any money to pay anyway. The ones that didn’t pay the last month’s rent also left the house a complete mess and it cost a couple of thousand to sort it out.

I rent out my Mum’s old home for her to pay for her care home fees. If she doesn’t get her rent, she can’t pay her care home fees. Not all landlords have deep pockets, despite tenants and the government’s belief that they do. Look at what happened during covid - the government pretty much gave tenants carte blanche not to pay their rent.

But, the bottom line is that no landlord in their right mind is going to rent a property out without referencing of some sort. Best you can do is to be up front with potential landlords. I would say you have more chance engaging directly with a landlord rather than via an agent because the agent just wants an easy life.

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I will not happily rent my property to students, I will happily rent to people I gel with and I am in Liverpool … A landlord cannot take 3 months rent as a deposit… Illegal …Only 5 weeks. I would offer 6 months upfront rent , may help

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Tl;dr, but I get the gist. Its a tough and completely unfair market. If I wasnt a home owner, I would probably be refused a tenancy myself as most of my income comes from letting properties. However, its not landlords’ fault. Its down to assessed business risks. As the operating climate has got more difficult for lanflords, the consequences of a mistake have become much greater. In that sort of environment, most businesses will take the line of least resistance. You just have to keep at it.

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Sounds like you need to update yourself about tenancy law. Landlords cannot accept a higher deposit than 5 weeks rent. They pay all the referencing fees so you get lots of chancers thinking it worth the risk to lie about bad credit. Then they just walk away when they fail without a backward glance and the meantime I am £££ down on fees. Council tax, lost rent etc etc
Personally, I have accepted tenants with ccjs if they are upfront and have a decent explanation. Liars get booted.

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Emma69 When I went for a mortgage. at about your age i was told I did not have a good credit history As I had no credit cards and had never borrowed money! Crazy > so I was advised to get at least a debit card . This I did , never used it , never used a cash machine . I got my mortgage and they loaned me more money than I had dreamt of, to buy a superb place for myself. I say this to encourage you not to give up. It will work out ok if you keep at it. I have taken on tenants with little money ,just because I liked them and they came across as ok , and i was right.

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Hi Emma69, as others have said, I would echo you need to keep trying as there are landlords out there who do use their gut instincts as well as referencing tools.
We were in Liverpool and helped three sets of ungrateful tenants who did not have all the of the references usually required.
Yes it could all have been worse for us but the experience of being a landlord was not a pleasant one. Some people more cut out for the job as in any area of life.
As regards your comment over mortgage companies needing more information on a person than individual private landlords, why?Someone is handing over a property in return for just five weeks of rent as deposit. By the same token the company offering any mortgage will be charging fees. They are both giving over the same product at the end of the day. Surely a mortgage company is more able to absorb the loss of a bad tenant (which is basically what you are when paying a mortgage) than a private individual.
There are plenty of horror stories on here (from both sides) but if you believe things are biased in the landlords favour, please take a look and then maybe you can understand the nightmare from the other perspective.
As frustrating as it is, just keep trying until it happens. There are one man band agencies in Liverpool who maybe more open to different circumstances as are not bound by corporate companies tick boxes, so maybe it’s worth a go at seeking them out too?

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Hi Mark , thanks for your message i appreciate it.

In what way sorry, are you expecting massive price increases, just so i can understand? I assumed youd mortgage payments each month are fixed? Or do you mean house insurance ?

Yes i agree 3 times people’s salary is a safer option, for both parties.

Do you think most landlords get the RGI? I understand why the insurer would ask for additional security by way of a guarantor, so its fair enough. I was disappointed to be asked for the guarantor , despite openly offering everything else. I didn’t realise, as a tenant , you cant give more than 5 weeks equivalent rent as a deposit. Do you think the option of a bond would help? We commonly ask for fhem in construction , so in the event fhe subcontractor fails to fulfil contract obligations , we as fhe main contractor, can call on the bond - rather than offering 3/6/9 months rent perhaps? Or, we take 5% refention from their interim payments as security for defects /defaulf on contract.

I am really surprised you deal with lots applicants who lie! Which is terrible really as there are decenf and honourable tenants like myself who perhaps get tarnished with same brush - might explain the increased due diligence (but applicants like myself are being punished for this…).

It wasnt easy being upfront about my credit history , as theres shame in admitting it. Plus, the rejection can be awful, knowing youre being judged straight off the bat when landlords havd never even met me. That being said, the landlord i dealt with very decently was lovely and sounded like he was willing to give me a chance . However , its when he asked for the guarantor, i knew it would be a no (both my parents are retired/semi retired and were low skilled minimum wage workers previously).

I went to view the property regardless. I was shown around by the landlords parents - they were so lovely. There was a mix up in communication , so the viewing was double booked . That was a awkward experience , but they were really nice regardless (couple in late 50s who wanted to move closer to daughter /grand daughter ). I emailed landlord today and thanked him, but turned it down because i couldn’t offer the guarantor. I said to him it was good to see it was going to a lovely couple, who sounded like they really wanted it (her daughters partner died and moved back to uk from abroad ). So it was a postive ending …

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Hi Cath, thanks for your message , appreciate it.

In what wag do you feel its biased in favour of tenants ? I dont feel this is the case as an applicant myself. The level of due diligence nowadays , favours the landlord -not the applicant. Or perhaps you mean once they become a tenant, the legislation/process favours them more then?

Ok i understand it can, in rare situations, take months to get a tenant out. Yet i am intrigued. Were there not signs in the beginning as to the credibility of the tenant and the likelihood of them not paying rent? Clearly , im not a landlord, so id need enlightening ! The sort of tenants who wont willingly move out, as soon as they default, would be determined by previous landlord references /history of paying bills, would it not? I suppose what i am trying to say is, its like we are all getting tarnished for tjose very rare occurrences…

It sounds like you have had some negative experiences and im sorry to hear that. Does the quality of the tenant , also depend on the area you are letting the property ? Subseqntly, this can attract a certain type of tenant maybe? I.e if its rough area (no other way of putting it!), then is it fair/wrong to say it will attract tenants who may not be entirely representative of that area? I dont know, im just trying to understand how, despite these stringent checks landlords do, how thry cam end up nightmare tenants…

As to your adcice, yes totally agree, all i can be is honest and up front with the landlord.

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Hi colin, thanks for your message.

Ah ok so you have a property in Liverpool! Great to hear you will not let to students , thats pretty uncommon in Liverpool , so refreshing to hear !

Didn’t realise it was illegal, at least now i know.

6 months rent up front is alot to ask - not many people have that much money! Like another landlord mentioned here, doesnt gurantee anything though i suppose …

Also was very reassuring to hear that you will only let to people you gel with , absolutely. Couldn’t agree more.

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Hi David, thanks for your message.

Can you expand on what you mean by your comment “As the operating climate has got more difficult for lanflords” - in what way? The way i see it, landlords are definitely benefitting and in some cases, exploiting a very buoyant rental market. You can basically name your price, given the supply shortage.

It sounds like to me, that there’s an increased risk for tenant credibility , rather than market volatility ? Your mortgage payments are fixed, i assume, and only risk i can determine is that of indemnification - cost of insurance going up. What else is there for you to use the operate climate reason sorry?

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Hi colin, thanks for your positive and encouraging message.

Ive had my debit card for 8 years now and never gone overdrawn. Unsure how getting an additional debit card would help sorry? Insofar, its my CCJ which is the huge red flag - regardless if i took out another two debit cards and looked after the accounts responsibly. As soon as my CCJ comes off it will be a huge relief and will no doubt pave the way to being accepted for tenancy applications.

Mortgage wise , its something i have considered. Thing is, not only would i need 10% deposit , but also money to cover associated costs such as solicitor’s fees, removal van, decoration, furnishing , insurance cover etc. Plus, id still want savings in my account - so you’re looking at £30k minimum (£20k deposit , £5k fees and other associated costs) and bit of savings left. Thats an awful lot of money. Doable on my wage yes, but id have to wait another year if i put my mind to if (and stay living with my ex for another year!).

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To expand on my comment about the difficult operating climate, I would include the following new requirements for landlords over the last 5 years:

  • section 24 tax increases
  • additional 3% SDLT on purchase
  • increased admin costs through new regulatory requirements
  • increased agency costs due to the Tenant Fees Act
  • increased eviction costs due to complexity of s21 and longer court times
  • increased costs to meet Minimum Energy Efficiency Standards
  • new electrical inspection requirements
  • the rise of local selective licensing
    And a host of other changes, including some still to come.

However, my point was really about the concerns landlords have about making the wrong choice of tenant, which is I think the question you’re really asking. Before the pandemic the Government statistic for the average time to evict a tenant in England was 44 weeks. The restrictions on eviction during covid meant that many more landlords than usual had experience of the cost of these delays, which of course increased dramatically. The current court backlogs mean that the average is now likely to be many more weeks than this and during that time a landlord can lose thousands of pounds in unpaid rent from a tenant that simply stops paying. It is not uncommon on this and other landlord forums for landlords to be reporting losses of between £10k and £20k before they get possession of their properties. With many landlords now making marginal profits due to the increased costs, this can wipe them out and in some cases lead to the repossession of their property by the lender. For this reason, many landlords are terrified of choosing the wrong tenant and have become totally risk averse.

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There’s a guarantor service called Housing Hand and I believe there are others too. Obviously it is at a price but it may be of interest to you.

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I meant cost of living price increases, sorry if that wasn’t clear.

I’ll be honest, I’ve been shocked at the poor quality of applicants I’ve had. The last straw was the nice seeming couple who “forgot” to mention they were 3 months in rent arrears, and had been given a Section 8 notice, and then tried to persuade their current letting agent to “forget” about this as well when giving their reference.

Many other applicants had unreliable incomes, or incomes that referencing showed to have been over-stated. Quite a few had also only been in the UK a short time so had little checkable history. One guy had what looked like an OK job, then announced he was paid in cash only, so nothing could be checked. He was also from abroad, so I suspected was working in the UK illegally.

I could be wrong, but I’ve begun to think decent tenants will usually register with agents, whereas all the dodgy ones target ads from OpenRent and the like because they know they’ll be dealing with private landlords who they hope will do fewer checks.

I finally have an applicant I’m looking to proceed with but if it falls through for any reason, I’ll be passing the property over to a letting agent.

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