I have a shameful admission to make. During my first years as a self-managing landlord, I definitely took the lazy approach to carrying out a lot of the typical processes. (I reveal some the consequences of this in my first blog article Landlords Beware – Rapport Alone Won’t Protect You https://senecarooms.com/2017/08/07/rapport/).
I had been hiring and firing staff since the tender age of 23, so I felt supremely confident in my people screening skills – and I mostly rented to tenants based on my ‘gut feel’ alone. Any prospective tenant who passed my ‘gut feel’ test would be given a basic application form, and I would have a quick glance over the information provided to confirm that all seemed great to me. If I had the time or inclination, I might follow up on some of the references, but I mostly didn’t need to as I’d already made my mind up – they were approved.
Over time, I came to realise that I was missing something important by skimping in this way. The whole referencing process wasn’t just about me feeling comfortable with the prospective tenant moving into one of my expensive assets, or about ensuring the other tenants received a new housemate who was easy or pleasurable to live with – the referencing process was also an opportunity to put some hoops in front of the prospective tenant, to enable the prospective tenant to feel they had worked for something worthwhile.
I realised tenants needed to feel that they had ‘earned’ their place inside my home in order for them to value and appreciate it.
And so our ‘Application Process’ was born. I even refer to it as such when I’m discussing with the prospective tenant about the next steps (“As soon as I receive the payment to reserve the room, the application process will begin”). It’s a cue for them that they are formally ‘under-review’.
So what exactly do I do?
These days, the process is actually quite long – LOTS of papers for the prospective tenant to read and sign – but in this post, I’ll just share with you the parts that are key for qualifying the tenant, and crucially, the reasons why.
Personal details
Age.
Does the prospective tenant’s age fit well with the other tenants in the house. Eg, other tenants are all around 28 to 30, but prospective tenant is 22. Or tenants are 22 to 30 and prospective tenant is 50. Age Discrimination means that YOU cannot reject someone on the basis of age (except if they are under 18), so you will need to discuss with the prospective tenant about the lifestyle habits / maturity level of the existing housemates and ask them to determine whether they feel they will be a good fit for the existing dynamic.
Remember that someone’s birth age does not necessarily indicate their maturity age – I have one house with a range of ages from 21 to 50. The 21 year old is an ‘old soul’, he’s very serious and business focused, has a well paid job and is often away on business trips. The 50 year old is also a wise soul, but is youthful, cheeky, vibrant, runs marathons and maintains a great sense of community in the house.
It is in everyone’s best interests (prospective tenant, existing tenants, and you) to have a harmonious house with happy tenants, so be transparent about the current dynamic, and let the prospective tenant decide if your house is a good fit for them.
Check the email address.
Most will just have an email address with their name, but you might come across a partybabe@hotmail or bigschlongallnightlong@gmail, or something equally as dreadful. The name might give you a giggle, but consider the personality type that would choose such a name and the likelihood they would cause disruption in the house.
Address details
Ask for the current address plus the two immediately previous.
By doing this, you will be able to see length of residence at each place to help you form an opinion about their stability.
Landlord or Agent contact details for all three addresses.
Instead of asking for the tenant to provide a pre-written reference, I prefer to ask for contact details so I can then contact whoever I choose. Follow up with the current and most recent previous address contacts at the very least. Obviously, we want to see the rent payments were always received in full and on time, and that the property was left in a good condition.
If they rented direct through a landlord at all, give the landlord a phone call. I have found landlords to be very open on the phone and will share further important information that doesn’t lend itself well to being written in a standard reference form (eg, there was a personality clash between Your Mr Prospective Tenant and another housemate).
If the prospective tenant has not previously rented, but they have sufficient income and their character seems a good fit, I would ask for a parental Guarantor as a back-up plan.
Work details
Validating work details
I ask for a lot of seemingly irrelevant information here. Business name; address; website; main phone number; payroll contact name, phone number and email; direct manager name, phone number and email. Most prospective tenants are genuine, but having to dig out all of this information will deter someone who is not telling the truth and they won’t bother to submit the application form (saving you time and future headaches). You can then also cross reference the information given with what is advertised on the website (eg, the manager name and number might be listed under “Our Team”).
Salary check
To ensure the prospective tenant earns enough to comfortably live in the chosen property, salary details are obtained from the payroll department. Payroll departments will need authorisation from the prospective tenant to release sensitive data about them, so we provide the prospective tenant with an authorisation form to sign, which we then submit to the payroll department. This helps to speed the process up a bit.
Character reference
Even though my ‘gut-feel’ does the job of judging a prospective tenant’s character, I want them to be aware that good character is an important requirement to live in our houses. I always tell prospective tenants during the viewing that I will require a character reference, especially if I am getting an off vibe from them. It’s usually enough to filter out those who won’t fit in with the rest of the house.
Choosing tenants for a houseshare is not so dissimilar to hiring staff for the workplace, so I request the character reference be provided by someone in a position of authority over the tenant (for example, a manager at work). The prospective tenant, above all, needs to be able to communicate openly and well, they need to be a good team member, and be helpful, respectful and considerate. Whether they are quiet and focused, or warm and friendly makes no real difference.
Social Media Check
A quick google search of the prospective tenant’s name or email address should bring up any associated social media accounts. Check for evidence of excess drinking, drug use, emotional drama, or posts complaining about a romantic partner or employer. I would suggest people displaying these characteristics would not be suitable to live in a houseshare.
Bank Statements
The last three month’s bank statements will be sufficient. A prospective tenant may object and say their salary is large enough, that they don’t need to provide their bank details too, but I explain it is important for me to see that they can manage their money well, regardless of how much they earn.
The first things I look at are the daily balance throughout the month, and the amounts coming into the account. If both demonstrate that the prospective tenant is living comfortably within their means, I won’t need to look any further.
If the daily balance is low, or occasionally or regularly tips over into overdraft, or the salary is high but overall balance is low, I will check the outgoings. Red flags here are serial shopping, gambling websites, numerous transactions in bars and restaurants, large credit card bills or other large or multiple loan payments, and large or multiple cash withdrawals. These are signs to me of someone with money management issues, and I wouldn’t take my chances with them.
If the transactions seem normal (train travel, supermarkets, petrol, netflix, the occasional web purchase or dinner/drinks out), but their balance is low due to a low income, I would perhaps ask the prospective tenant to provide a parental Guarantor.
Guarantors
Parental Guarantors are a God-send! and have helped me on numerous occasions to move a disruptive tenant (their child) out early, or to ensure their child is reminded of what grown up responsibilities and priorities are all about, so I regularly ask for a Guarantor when it is the first time a tenant is moving out of the parental home.
ID
ID is needed for a few purposes.
Obviously, first to just confirm the person you are renting to is who they say they are.
You will also need to input the name of the tenant onto the contract exactly as it appears on the ID document (their legal name). The last thing you would want is an eviction case thrown out of court because of a simple error in their name on the contract.
Right to Rent
Under the Immigration Act, you also need to check a prospective tenant’s (and any permitted occupier’s) eligibility to rent in the UK BEFORE you rent your property to them. It is actually a criminal offence to omit this step in your procedure. UK, EEA and Swiss nationals, and those with an Unlimited Leave document, have an automatic right to reside and rent in the UK. For those with a time limited Right to Rent, you will need to see their Biometric residence card, visa or Leave to Remain documents, and carefully check the dates of expiry. A contract cannot be issued for a term longer than the prospective tenant’s right to remain in the country.
You can also use the Home Office Right to Rent checker https://eforms.homeoffice.gov.uk/outreach/lcs-application.ofml for prospective tenants whose forms are with the Home Office.
For more on Right to Rent checks and other legalities, these were covered in our blog post “Easy Guide to Landlord’s Legal Duties – Part 2” https://senecarooms.com/2017/11/29/easy-guide-to-landlords-legal-duties-part-2/.
The tenant qualifying process might seem long and arduous, but when you understand the reasons behind the specific document and information requests, you will want to make sure you collect them every time too.
And remember, when you are qualifying tenants who will be sharing their new home (your HMO) with stranger housemates, it always pays to dig a little deeper into their personality and lifestyle habits.