Top-tips on finding terrific tenants for your buy-to-let property

But what makes the ideal tenant? In general, most landlords agree that the ideal tenant is reliable at paying the rent each month, maintains the property and is planning on living in the property for a long period of time. There is no specific method for ensuring that your tenant is the best person to be occupying your property, but here are five tips to help you get off to the best possible start.

  1. Make sure that you carry out background checks

It is highly important that you know who you are renting your property to: check their credit scores, ensure they have a stable income, ask for rental references and analyse any past problems very thoroughly.

Don’t worry about being too intrusive, you need be sure that your potential tenant is able to pay their rent.

It is recommended that you ask to see the last three months of their bank statements, find out what they do for a living and what hours they work. This will give you an overview of their income and give you a good idea of whether or not they will be able to afford to pay you rent.

However, even with all of this information, it can still be difficult to know if the tenant will be reliable. The majority of landlords request references from previous landlords, credit reference agencies, or the tenant’s employers. If the tenant is a first-time renter, then we suggest asking family, friends or teachers/lecturers for a character reference.

Some landlords choose to use lettings agencies to find a tenant for their buy-to-let. These agencies can do background checks, and many of them actually have a catalogue of tenants that are ready-and-waiting. However, you do need to pay for these agencies, and contracts with them usually take at least 10% of your monthly rent. Some agencies charge extra for background checks on the tenants, whilst others include everything in an overall fee.

  1. Check the written contract thoroughly

Buy-to-let properties take a lot of time and effort, this includes a very large amount of paperwork, which can be tedious and tiring.

It is crucial that a tenancy agreement is written and drawn up correctly and is legally binding. A well-written tenancy agreement that is signed by both you and your tenant protects you both in case anything were to go wrong.

  1. Ensure that the security deposit is correct

When letting a property in London, a tenant will generally pay a security deposit of six weeks’ worth of rent; if the property is anywhere else in the UK then a month’s worth of rent is typically paid upfront.

The deposit is a very good indicator as to whether the tenant will be punctual at paying their monthly rent, if the security deposit is late then a very bad impression is made.
It is also important that you wait until the tenant has paid their full deposit and it is securely stored in a Tenancy Deposit Scheme before you hand over the keys to the property.

A proper inventory of the property should take place before the tenant moves in. The inventory should include a full list of any fixtures, fittings or items (such as furniture) in the property. Any current issues such as damp or stains around the house should also be included in the inventory. This inventory should be signed by both you and the tenant to confirm that you are both aware of the property’s condition before the tenancy begins.

The inventory will be particularly useful when it comes to returning the security deposit at the end of the tenancy. Until then, landlords are legally required to register the deposit with a protection scheme so that the money is kept safe until the tenancy terminates.

  1. Always check their identification

It is important that you know that your tenant is who they say they are. This has now become increasingly important as from this month (February 2016), new rules have been introduced  that hold landlords responsible for ensuring that their tenants have a ‘right to rent’.

A ‘right to rent’ is when a tenant has the right to live in the UK, this means that, as the landlord, you are responsible for taking copies of passports and immigration documents. If it turns out that your tenant is not legally allowed to be living in the UK, then the failure of checking the immigration status of your tenant could leave you with a hefty fine.

  1. Trust your gut instinct

At times, a buy-to-let can be a very difficult job so it is important that you and your tenant are able to work together. Before agreeing to a tenancy, you should first meet your potential tenant and get a good idea of their character and what kind of person they are.
Are they organised? Do they seem trustworthy? Will they complain about every slight issue?

You cannot rely on the fact that somebody has a good job and regular income, as this does not necessarily mean that they will be the perfect tenant. Someone with a highly paid job may still treat your property with disrespect, cause problems with the neighbours and shy away from any DIY.

If you are unsure about your potential tenant then it is recommended that you keep looking – you should be able to trust your tenant, and they should be able to trust you.

*Back to February 2016 Newsletter*

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