I’m reaching out to tap into the collective knowledge of this forum after a recent tenant screening experience left me thinking there’s room for improvement in my approach. Despite an applicant showing a stable income, a deeper dive revealed a series of financial red flags, including a gambling habit, reliance on payday loans, a CCJ, and an alarmingly low bank balance.
To enhance my screening process and avoid future surprises, I’m considering implementing additional steps. I’m thinking about requesting bank statements and payslips right off the bat, before moving on to detailed referencing. I’m also contemplating using free credit check services like Equifax and ClearScore to get an early read on an applicant’s financial health.
I’d greatly appreciate your insights on a few points:
Preliminary Financial Checks: Do you find value in collecting bank statements and payslips before conducting full references? If so, what are the key financial indicators you look for in these documents?
Sequential Referencing: Is there merit in focusing on the main tenant’s financial background first to catch major issues early? as opposed to paying for multiple referencing at the same time. How do you integrate this strategy into your screening process?
Credit Assessments: Are free services like Equifax and ClearScore sufficient for an initial financial overview, or do you recommend any other services for a comprehensive credit check?
Screening Strategies: If you have any additional strategies or tips that have served you well in uncovering not-so-obvious financial issues, I’d be keen to hear them.
I’m aiming to make my tenant screening as thorough and effective as possible and believe your shared experiences and advice could be invaluable in shaping a more robust approach.
Thank you in advance for your time and any advice you can share!
6 months of bank statements will give you a huge amount of information about the applicant’s financial stability and their affordability. I request these when I hand them an application form. I don’t move to references unless I have zero doubts about them based on detailed bank statement analysis. It’s saved me time and referencing fees because about a third of people who provide the statements to me do not meet my requirements for liquidity or affordability despite what they’ve said to my face when viewing.
I look for an increasing balance each month. This shows that they are savers and not spending all their income.
I check that income is from verified sources e.g. DWP or employer. Regular income from personal transfers (likely family) is a red flag because it shows someone is propping them up.
I look for any regular outgoing transfers that are large and/or for opaque or undesirable reasons. Examples I’ve seen include someone paying for pet insurance when I don’t allow pets, making payments to schools when they’ve told me they don’t have dependent children, someone paying utility bills for an address that they have not provided to me, loan payments that they have not mentioned to me, regular spends on national lottery or similar. All of these resulted in follow-up conversations with applicants. In 90% of cases their application went no further than that follow-up conversation.
I total monthly income from dependable sources e.g. DWP/employer and check that the average affordability is no less than 2.5 x pcm rent.
I don’t know why any LL would pay for referencing without first doing this, but many blithely waste their money doing so.
At the end of the process, referencing simply confirms everything I already know about the applicant.
In my auto response to enquiries on OpenRent, I ask applicants to call my LL number and state explicitly that we do not pursue any enquiry unless they call me first. That immediately filters out those who cannot follow simple instructions and/or expect me to run around after them.
When they call, I ask them specifically
If I do a credit check, will I find anything?
Do you have any outstanding loans you are paying off? If so, how much and how often and what’s the balance?
Do you have any dependents who will not be living with you? If so, what are your financial obligations to them?
Are you still in touch with your LL from the property before the one you’re currently in. A reference from a former LL is worth something. A current LL reference is virtually worthless if they are a terrible tenant the LL desperately wants to move out.
What’s your monthly income? It’s amazing how often people don’t actually know, despite filling it in while applying on OpenRent. And it amazes me how often they exaggerate it too.
Are you happy to provide 6 months of bank statements? No one has ever objected to this, but if they did it would disqualify them immediately. If they’re happy, then I ask them how many bank accounts they have e.g. savings, joint account and whether they can provide them for each one. I very often see statements where people have money in/out from another account they haven’t admitted to.
Only if I feel that the applicant meets my criteria do I then offer a viewing. About a third of applicants don’t make it past this phone call so, along with my auto-reply, I’ve eliminated nearly all of those who would have wasted my time with a viewing.
At the end of the phone conversation I have a load of information. If at any subsequent point anything they provide contradicts what they initially told me, we have a conversation about it and, more often than not, that puts them out of the game because it’s all about trust and if they undermine that, they jeopardise their application.
After years of following this procedure and seeing how it weeds out those who lie from those who don’t, I’d say it was essential. If you can provide an equally useful alternative, I’m all ears.
In addition to these ways of screening, I do a deep dive on the persons, social media accounts, why you can find a lot of information about their habits, the job, if they have a partner and children or not, etc.
I think when advertising a rental the LL should at least be upfront that the potential tenant is giving permission to the LL to cyber-stalk them Gone are the days of hoping the private LL won’t bother with a credit check. Better to take chances with a letting agent and their endless impersonal shenanigans! Ahh, don’t take it personally. I just find a lot of these practices intrusive. If I didn’t go along with them as a tenant I’d be homeless even though I have excellent affordability, credit, and references. Oops, but not willing to put my partner’s elderly parents up as guarantors so I GUESS I’M OUT. Honestly doesn’t seem right somehow.
Thank you so much, Tatemono, for both of your insightful replies. Your detailed explanations and suggestions are like attending a master class in tenant screening! I am very grateful for the time you took to help clarify these issues for me.
Hi TateMono, I use an auto-responder with 9 questions to screen potential tenants before they even reach out to me directly. I’ve noticed you prefer them to call you.
How much time do you typically spend on these calls, especially if you’re dealing with a large number like 80 inquiries?
I’m also curious because in my experience, when potential tenants insist on calling instead of writing, it often leads to dodgy explanations that they don’t want to put in writing. Have you encountered similar issues? How do you handle them?"
Hi Graham, Thank you :).
I read your approach about doing a deep dive into prospective tenants’ social media accounts to gather insights about their habits and personal circumstances. How do you handle situations where a tenant doesn’t have social media profiles or when they have a common name, resulting in too many search results, even when you include specific local details like ‘tenant name + Colchester’? Any tips on navigating these challenges
Last time I advertised, I got about 50 enquiries over a couple of weeks. About 20 called me. Each call lasts 10 minutes or so. About half were offered a viewing. A couple of them pulled out before the viewing so I ended up doing about 8. Only one was offered the tenancy. All the others fell by the wayside at one point or other. I don’t find that too much, but i can see how perhaps in your case with more enquiries, written responses, or a combination of the two might be worthwhile.
I find a phone call preferable to writing because I get a feel for the person from their unprepared responses. That feeling counts for a lot as I have excellent rapport with every single one of my tenants. If I don’t get the vibe from the phone call, then they don’t get a viewing. Simples.
I would agree that its very invasive, but would also agree that its sometimes necessary. The one time Ive done it, I agreed to review the information and then immediately delete it from all devices and the server.
Gone are the days of hoping the private LL won’t bother with a credit check. Better to take chances with a letting agent and their endless impersonal shenanigans! Ahh, don’t take it personally. I just find a lot of these practices intrusive. If I didn’t go along with them as a tenant I’d be homeless even though I have excellent affordability, credit, and references. Oops, but not willing to put my partner’s elderly parents up as guarantors so I GUESS I’M OUT. Honestly doesn’t seem right somehow.