Eight key insights for landlords
I’m Sim Sekhon, MD of LegalforLandlords and over the years, I’ve amassed a great deal of knowledge about the property rental sector. But I’m also a landlord and while the sector might be evolving all the time, one thing remains constant: landlords need protection. That’s why I’m sharing eight insights that recognise this fact.
1) Quality tenant referencing costs money
If a reference is cheap as chips, there’s a good reason. It costs a little more to get the job done right, but if you’re still counting the pennies, it’s worth putting the cost of a reference in context. The average length of a tenancy is 24 months, with an average rent of £950. That’s around £23,000 of income you are jeopardising – just to save the price of a coffee.
2) Don’t leave decisions to someone else
It’s your right to see the full and comprehensive tenant reference – even if that’s something your agent has arranged. The Property Ombudsman regulations require an agent to give you a copy before the tenant moves in. If you don’t get it, ask for it. What’s more, feel free to question it.
3) Balance the costs and benefits
Referencing can dig into all sorts of areas. Land registry titles, power of attorneys, criminal record checks, digital ID verification, multiple address checks, voice recorded calls, letterheaded paper, the list can go on and on. The more checks made, the longer it takes and the more it costs. You need to find the balance that works for you, minimising both risk, expense and void periods.
4) Open Banking is fantastic
The technology is secure – banks have been using it for years – and it speeds everything up. A few clicks and all the important documents and evidence is in place. It’s accurate, easy to use and a huge win for all parties.
5) Who can you trust?
Be careful about the information you receive. Can you trust a previous landlord who wants to be rid of a troublesome tenant to be 100% honest in their reference? It’s the same with agents and references they complete. Are they glowing when they should be cautious? Knowing who to trust isn’t easy, but you’ll soon learn who you can’t rely on.
One thing you can trust is the info you get from Open Banking (see point 4) which will show payment history, rental amounts and dates. If there’s no other reliable information, it’s valuable and objective.
6) Back tenant referencing with rent protection insurance
Referencing used the right way will protect the interests of landlords, tenants and agents but even the best, in-depth referencing service isn’t a cast-iron guarantee there won’t be trouble ahead. Even after a positive reference, rent protection insurance makes sense – whether we’re in the middle of a pandemic or not.
7) Fraud is a fact of life
At LegalforLandlords, we find instances of fraud every week: bogus employment records, payslips, bank statements, company email addresses, websites, Companies House listings, telephone numbers, fake contacts, fake landlords, fake agents. Often the fakes are very sophisticated. Protect yourself by choosing a referencing provider who will do everything possible to eliminate this risk for you. Remember, a cheap, fast reference isn’t going to dig below the surface.
8) Do as you would be done by
LegalforLandlords conducts referencing for every client in the way I would want it done if it involved my property, tenant or investment.
The do as you would be done by principle runs through everything we do. It’s how we build trust in a challenging world.