Get the right tenant in — 6 steps framework fizboapp Follow Mar 3 · 5 min read

7 minutes read

Whether you’re in the private renting business to supplement your income, build a pension for retirement or create wealth for you and your family, there’s one thing that keeps your growth engine running: staying profitable. The main malfunctions that will slow down your engine are void periods, rent arrears and property damages. According to this 2018 gov.uk survey on private landlords, the major reasons for ending a tenancy by asking the tenant to leave, not renewing the tenancy or evicting the tenant where:

· Tenant was in arrears — 58%

· Tenant didn’t look after the property — 45%

As the Dutch philosopher Desiderius Erasmus quoted “Prevention is better than cure” when referring to a person`s health, the same goes when renting a property. You have to prevent getting in bad tenants that can harm your properties and profits. This requires you to filter prospective tenants and select the appropriate ones for your properties.

We have created a 6 steps framework that will enabled you to efficiently screen your potential tenants and bring the right tenant into your property.

Step 1 — Define what the right tenant means for you

Each of your properties present different characteristics, features and facilities that would best fit a certain type of tenants. While a family with children and a dog might be suitable for your detached house from outskirts, they might not be appropriate for your city center studio. For each of your properties define the desired tenant profile by asking yourself this 7 questions:

1. What’s the preferred household structure?

· Single

· Couple with children

· Couple without children

· Single parent with children

· Home sharers

2. How many people can move in?

3. Foreigners or UK residents?

4. What employments status should they have?

· Employed

· Self-employed

· Student

· Retired

· Socially assisted for illness or disability

5. What monthly income should they have?

6. Do you accept pets?

7. Do you accept smokers?

There no such thing as ideal tenant. Chances are that good potential tenants will not meet all criteria resulted after asking yourself the above questions. It’s important to define what is a must for a tenant to meet and what is just nice to have.

Step 2 — Interview potential tenants

Now that you have defined the right tenant profile for each of your properties, it’s time to advertise.

Once you have potential tenants that show interest in your property, recheck STEP 1.

It’s important to have a tenant you can communicate with and that affords to pay the rent on time. Get a feeling if it’s worth to go further by asking the following questions:

1. Why are you moving?

· Pay attention if there were disputes with the previous landlord or neighbors

2. How long do you want to rent the property for ?

· Move to the next tenant if its less than 6 months. This way you will avoid frequent void periods.

3. Are you happy to rent the property as it is?

· If there are new requirements that are not easy to fulfill, move to the next tenant

4. Are you willing to do a Right to Rent check?

· Beware if tenant refuses or finds excuses

5. Do you have a month’s rent and deposit in advance?

· If they don’t, ask more questions to see if it`s a transition period ( e.g. changing jobs) or a permanent situation. Avoid the latter.

6. Can you provide proof of stable income?

· Walk away if they are unable to provide it

7. Are you willing to do a Credit Check?

8. Do you have a reference from previous landlords?

· Beware of excuses as why they cannot provide references

9. Have you ever been evicted?

· Anyone can fall on hard times and an eviction may have been a one-off circumstance

Step 3 — Prevent scams by verifying tenant’s Right to Rent in UK

Landlords have the responsibility to verify if their tenants have the Right to Rent in UK. If they bring into their property tenants that don’t have it, they could be fined or imprisoned.

You can now easily do an online Right to Rent check at https://check-biometric-residence-permit.service.gov.uk/

Step 4 — Prevent late rent payments by checking tenant’s credit score

“The best predictor of future behavior is relevant past behavior” Psih. Albert Ellis. That’s what a credit score tries to achieve.

If an individual was usually late paying bills or with regular payments for their credit, high chances that they will be late with rent payments too. Their credit score will be low in this case.

Be cautious on how you use this tool.

A person credit score might be not that good because they haven’t taken any credit in the past. That doesn’t mean that they are not good payers.

You can now easily do an online Credit Check with Experian at https://www.experian.co.uk/business/identity-fraud/background-checks/private-landlord-tenant-checks/

Step 5 — Get proof of stable income

As credit score tells you if a tenant is a good payer or not, the proof of stable income will tell you if they afford to pay the rent and for how long.

Request your tenant to provide any of the following documents:

1. Copy of employment contract

2. Copies of trade accounts if self-employed

3. Bank account statement for the last 6 months

· Follow the amount credited each month

If in doubt, check the validity of the income documents. Here are some ideas:

1. Phone or email tenant’s employer

2. Phone or email tenant’s accountant

3. Phone or email the bank from the bank statement

Step 6 — Get reference from previous landlord

You have done all the checks and everything seems to be good. Last thing to do is to get a reference from previous landlord.

Verify its accuracy by checking at https://search-property-information.service.gov.uk/ who is the owner of the property from the provided address. You can also type the landlord’s phone number on Google and find out the name associated with it.

Now it’s time to contact the landlord and ask 2 simple questions:

1. Did they pay the rent on time?

· If they where a couple of late rent payments, ask the landlord the reasons. There might have been like changing jobs, going into vacation, illness etc.

2. Did they look after the property?

· Pay attention to the type of damages the landlord complains about. Some things are meant to get broken after many years of day to day usage like dishwasher, door handle, chair, sofa etc.

But what do you do if the tenant can’t provide a reference from a previous landlord?

In case is their first rent and passed the other checks, you can be confident going forward.

If it’s not their first rent, there might have been a dispute with the previous landlord. Try to understand what happened asking the tenant to explain the situation. If you have any doubts after the explanation, move to the next tenant.

We at Fizbo are building a professional letting toolbox that aims to make your life easier by automating or simplifying every step from the letting process. Join BETA at https://fizboapp.co.uk and we will let you know when the app is ready for you to try out.

This is it.

You have now a 6 steps framework to get the right tenant into your property.