• Full name and Date of birth

• Current address and previous address (if less than 3 years)

• Occupation, time at company, address of employer (for reference)

• Need to acquire Housing Benefit for rental payments?

• Name, role, address, telephone of guarantor (if applicable)

• Children, pets, smoker preferences

• Next of kin/ emergency contact telephone number

• Name and address of character referee

• Banking details (for reference) – sort code account number, branch address

Obtaining Tenants References – the purpose of checking up on tenants is fairly obvious – to avoid the risks of renting your property out to unreliable or dishonest tenants; sitting tenants, bad tenants, late payers and tenants who disappear still owing rent, will all result in lost profit, stress and hassle. Ideally you want a tenant who can easily afford the rent, pays on time, will look after your property as if it was their own home.

Avoiding Fraudulent Applicants - you should collect information independently of the tenant, so as too avoid for possibility of fraud. If you know where the employee works, it becomes easy to trace a tenant who has left owing money. In the worst-case scenario (need to regain possession), you will be able to use any false information innocently collected from referencing as part of the tenancy agreement. This means that in a breach of the agreement, if written information originally provided by the tenant was later found to be false, you can rely on the Housing Act Ground 17, to assist in the speedier removal of the tenant.

Types of References – using the results of the information collected soon after you took the holding deposit, you can now request five main types of references to vet the potential tenants reliability and suitability:-

• Employment Reference - ask the tenant the contact details of their employer and ask permission to contact them for a written character reference and whether they believe they can cover the rent. You need to establish the length of time they have been in employment as a basic measure of financial and geographic stability. If your tenant has just started their new job quite recently, it is a good idea to ask for a reference from their previous employment. Any additional comments by the employer should be welcome. For the self-employed tenant, ask for 2 years accounts submissions and/or a reference from their accountant.

• Past Landlord Reference - if the tenant is already renting they may be arrears – this is of course of key interest to you. So their previous landlord should be able to comment on their reliability/ unreliability. Beware if the tenant is in areas and the previous landlord would be happy to see the back of them, they may not be as forthcoming about the tenant’s character. For the vast majority though, most landlords would be quite willing to comment. Post or fax them a standard letter asking about the dates and rental value of the tenant; asking about their reliability of paying rent and in looking after the property.

• Credit Reference – there are a number of credit checking agencies that can assess the financial stability of your possible tenant. They operate using integrated databases containing histories or poor credit ratings (CCJ’s), criminal records, previous addresses, spending profiles etc. Specifically a lot of data is linked to a postal code address. Socio-economic data can also be gathered based on the quality of the geographic area where the tenant previously lived. All factors taken together add up to a person’s overall credit rating. If you are planning a company let, you must do a credit check on the company (as opposed to the employee/ tenant).

• Bank Reference – in theory, the tenant’s bank will have access to their payment and income history, reliability to repay debt, overall financial situation and be in a strong position to provide information to you to help you make a judgment on your prospective tenant. Clearly the Bank will only consent to providing a reference following written permission from the customer/ tenant. The cost is around £10. In practice, a bank reference is useful but not very revealing and Banks tend to be more conservative in the general information they provide. They do not want to upset their customers and only present a point in time view based on their tenants current financial situation. A more practical approach might simply be to ask to view the last three to six months of bank statements – some people may be naturally be wry of this, so it might be more comfortable if you do this with the tenant rather than taking copies away. If a tenant is creditworthy it should not be a problem.

• Character Reference – a character reference can be useful, as long as the reference comes from a local professional person (doctor, policeman, director). You must ask what their relationship is with your prospective tenant and how reliable they consider the person to be. You must exclude accepting a character reference from all family members (for obvious reasons).

Guarantor – in order to guarantee that you will receive the rent (where you are concerned about the tenants ability to consistently pay rent), you can demand that a “guarantor” be provided. If your prospective tenants will be students, references will be a problem – they are unlikely to have an employment history, previous landlord or banking history. In this case you should ask your prospective tenant for a guarantor – this is a person that accepts financial and legal responsibility for the prospective tenant. This heavy burden is usually placed on their parent’s shoulders or a close family friend. If you are letting to a company, a senior manager or Director should be sought as the guarantor. You must undertake a full set of references on the guarantor (as if they were going to be your tenant). In addition, it is advisable to ask for a written agreement be signed by the guarantor ensuring rent and costs are paid if your prospective tenant does default. Your solicitor should have this standard form of agreement.

The “Dodgy” Tenant – be very aware of the characteristics of dishonest tenants. Do they want to pay the deposit in cash? Are they in a rush to enter the property? Have they pressured you into agreeing the tenancy before reference checks are complete? Have you personally spoken on the phone with their employer? (don’t accept a paper copy produced by the prospective tenant).

Collecting Rental Deposits – if you are not using an agent you should collect the deposit yourself from the tenant (usually one and a half times monthly rent) plus one months rent in advance, at the same time the tenancy agreement is signed (see 7.14). If you are using an Assured Tenancy Agreement (AST - see 7.14) there is no maximum rental deposit – but the industry norm is 6 weeks. If you are planning to use an agent, the agent would normally hold the deposit in a bonded separate bank account, acting as an independent third party stakeholder between you and the tenant.

Deposit Payment Methods - avoid accepting cheques from your new tenant as this will cause a delay while you wait form them to clear. A bankers draft is ideal because it is instant, guaranteed and secure. There will be a nominal charge from the bank to produce this, which may put your tenant’s nose out of joint. Cash is less of an option these days, for more expensive, professional rentals – as it’s insecure and sometimes awkward to keep track off. At the same point as you accept the rental deposit, insist on the setting up regular automated rental payments through the use of a regular monthly standing order (you can get a standard order form from your bank for the tenant to fill in).

Purpose of the Rental Deposit - the purpose of collecting a deposit is to act as a “bond” to pay for any potential damages caused by your tenants during their tenancy. Therefore, the deposit is used as security, following the final check out, (once the tenants finish their tenancy) to pay for replacing items that may have been accidentally or deliberately broken or damaged. Deductions from the deposit can only be taken out following the tenant’s permission in writing (remember it is the tenants money not yours). The deposit should be returned in full if there is no damage to your property (even if there is some inevitable wear and tear) – you, the landlord pay for wear and tear NOT the tenant - it is normal to expect some ageing of furniture. Never allow your new tenant to enter the property before funds have been cleared and in your bank account and the tenant has also signed the tenancy agreement…

Signing of the Tenancy Agreement - Never try and draft this legal document yourself (unless you are a solicitor). You should get your tenant to sign the agreement before they take possession of your property. Two copies should be prepared (the original and counterpart), which should both be signed by your tenant. You keep the original copy and give your tenant the counterpart. It is always prudent to ask for a witness to sign in the presence of the tenant signing, in the unlikely event of any future legal disputes

Main Functions of the Tenancy Agreement - the AST protects you, the landlord and the tenant’s statutory rights.  With the AST, you will be entitled to increase the rent periodically with the addition of a clause in your AST. If you are letting to sharers, you need to make sure a clause is added making each individual jointly named and responsible for the rental commitment (a “joint tenancy”). If one person leaves, for whatever reason, the remaining sharers are responsible for all of the rent.

Additional Clauses –If you are using a letting agent, they will have their own version of the AST, incorporating additional clauses to protect you from local risks and the very latest national regulatory amendments.


Help Tenant Contact Utility Companies – now that your tenant has paid their deposit and signed the tenancy agreement, they must contact the utility companies to register for imminent use. Some companies will only allow tenants to do this from the day they enter a property. Make their life simpler by providing name, addresses, telephone of the following utility companies:- gas, electric, telephone, sewage, water, TV licence and council tax. Remember to also include the meter readings, box numbers and other unique identifiers. Log these yourself, so that when check out time arrives in 6 months, resolving administration becomes simpler.

Inventory Check In - whether you are letting a furnished or unfurnished property, it is essential that a detailed inventory take place before the tenancy begin.

What is an Inventory? – an inventory is an accurate written description of your property and its contents, providing evidence in the event of a future dispute regarding the property and/or its contents. An inventory will protect you and the tenant from disputes, as it is a document you both sign up and agree to, before the tenancy begins. The inventory should list all the contents of your property and give details of the condition of the property itself for both you and tenant's reference, at the end of the tenancy. Check in is not as emotive as check out (as the tenants deposit money is as stake) – so the more practical and objective you can make it for your tenant, the less potential stress and concern will be caused.

How and When Should I Prepare the Inventory? - post a copy of the draft inventory to the tenants approximately three days before the tenancy is due to start, so they know what to expect. Note all the items in terms of their individual description, quantity, condition (e.g. scathes and stains) and the room location. This should include the state of any gardens – hedges, lawns, beds – should all be handed back as you left them – neat, trimmed and cared for. In addition, note safety labels of furniture (regulatory implications), numbers of keys and any safety manuals for appliances. In other words, the more detailed and thorough you make the inventory, the less likely a dispute will occur at the end of the tenancy, (regarding any dilapidations and subsequent deposit deductions). Use a camera or camcorder if you are really concerned, as there is no way that written words can dispute recorded pictures. Remember to note all the meter readings for gas, electric and water (if metered) on check in day. Once your tenant is happy, ask them to sign and date two copies (one for them one for you) which you must also sign.

Welcome and Hand Over Keys - when you finally hand over the keys make sure you have one set, the agent has one set (if you are using an agent) and the tenants have two sets (including any other keys for the windows, padlocks, alarm, garages etc). Personal touches and first impressions really do count… If you cannot personally welcome your tenant to their new home, leave a note or card; detail utility companies telephone numbers as well as local information on restaurants, take-away, bus and train timetables, maps, local emergency telephone numbers etc. If there is a burglar alarm at the property remember to write down the code in your note. Include your contact details and the agents contact details (if you are using one). If you can personally show the tenant around, remember to point out where and how to use the main cooking appliances, meter box, smoke detectors, electrical mains fuse box, stop cocks and burglar alarm.
 

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