Tenants who fail referencing

Landlord Discussion
1

Hi there,

Due to my partner’s work relocating - I now find myself becoming a landlord and needing to rent out my house.

I found two prospective tenants, a couple, who I had a good feeling about and accepted their application.

They have since both failed referencing due to the following reasons:

Tenant 1 - failed affordability as they work part-time, but also do freelance work on the side - which Openrent wasn’t able to account for. They have provided me with bank statements showing additional freelance ad-hoc income. Openrent also weren’t able to verify their referee due to the HR person not having a company email address (the person works for an individual)

Tenant 2 - failed due to an IVA on their credit check (after speaking with them, this was due to them being victim of identity fraud after a well publicised data leak/cyber attack at their organisation and them following financial advice whilst they go through court proceedings to rectify - I have asked for proof of this). Am still awaiting confirmation of work and salary from their HR department (and in the meantime, they have sent me a letter from the employer directly showing salary and additional commissions) - as open banking only picked up on their base salary, and again failed the affordability. They have also provided me with evidence of additional funds in the form of student funding (as they’re studying part-time).

Their previous lettings agent has confirmed rent is payed on time, property looked after etc - which is relief.

They have been forthcoming and understanding throughout, offering to pay 3 months upfront and to show additional evidence to me where possible.

Due to the above, I asked for a guarantor as I would be keen to take out rent guarantee insurance - which they have agreed to. However the guarantor has also failed on affordability due to their monthly pension payments not meeting the right level. They inform me they have additional money in different savings accounts - which again, openrent wasn’t able to pick up in the same transaction.

After some investigation of rent guarantee insurance - I have found a provider who would be able to insure me if the guarantor can provide 6 months of bank statements showing the savings (6x the monthly amount) - which again, the tenants/guarantor is happy to provide. So it looks like I could accept them and take out insurance.

But, because this hasn’t been the most straight forward - I’m still a little nervous.

Does anyone have any guidance or experience here that might help in this situation?

Am I being too lenient and I should look for a more straightforward tenant. We are due to move at the end of August, and I’m pretty tired of showing the house / want to get it sorted (but also dont want to make the wrong decision).
Is covering myself with the insurance enough?

Thanks in advance - keen to hear your views and advice.

2

forget them this is all dodgey, not declaring all earnings? you cannot trust them . Move on

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3

I think deep down you know the answer your just wanting someone else to agree
Forget them and move on dont be too hasty to rent the place (i know some say its dead miney when empty) but its better to have the right tenants besides if its advertised well a faur price and in good cindition you shouldnt struggle with enquiries

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4

I would agree with the other replies, but would add that accidental landlords are the most at-risk group in the industry. Unless you are interested in doing a fair bit of training to undrrstand the 160+ laws governing our sector, I would suggest you get a fully managed service from a local agent.

5

Thanks all - super appreciate your input! :pray:

6

I don’t agree I really don’t like the way open rent do the referencing. I have lost out on stable tenants due to the way they do it. They don’t allow multiple sources of income on their system and also the open banking some tenants just cannot share their data through this way but that’s the only way open rent to it. Go with your gut

7

If you are completely inexperienced please ignore Jaspreet1’s advice and get a gastric bypass. Your gut currently hasn’t got a clue how to tell a good applicant from a bad one.

Yes, OR’s referencing doesn’t cater for applicants with multiple sources of income. But there is a good reason for that: someone with multiple sources of income is unlikely to be someone who you can verify as having a dependable income and that’s what counts.

Safest bet: go with the collective gut which is to wish them well but discount them based on the multiple issues you’re facing with a tight deadline. Doing it yourself is a false economy in your case. Get a fully managed let from a reputable agent and let them take the strain.

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8

My advice would be NOT to proceed to contracts with anyone who fails financial referencing and credit checks. My reason is that without this referencing “PASS” you will not be eligible for Rent Guarantee Insurance. I have had an absolute nightmare with a tenant this past year. Altho tenant and the guarantor passed on financial checks and affordability, the tenant defaulted and was 7months in arrears by the time the tenancy term ended this week. I have never been so relieved when the RGI legal team picked up my claim and paid me monthly for the arrears. Furthermore, they handled all the processes of serving Section 8 Notice and eventually at the end of July, the case was heard in county court. The judge ruled in my favour giving me immediate possession of my flat without even having to wait for bailiffs etc. I will ALWAYS take out RGI insurance in the future as you just never know what will happen with a tenant. Money very well spent indeed. It saved me literally over £10,000 in arrears not to mention legal and court fees. If a prospective tenant fails the referencing checks I would not touch them as it would mean I would not be eligible for the RGI. Be warned !!

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9

Thanks all for your comments.

I think writing this post was helpful to externalise the situation and what I’d been thinking, and I think if it’s generally complicated to begin with… there’s a high chance it’ll be complicated later down the line.

An update: we did decide to stop the application, as given these things were flagged - I would have wanted to put rent guarantee insurance on the property, and this wasn’t possible.

I don’t think these things are ever black and white, and I do feel the tenants were genuine - however, I wasn’t willing to take the risk this time (or ever).

Thanks again.