A lettings agent is to start running checks on landlords after a tenant lost his flat when it was repossessed because the landlord was in mortgage arrears.
Daniel Thomas, boss of The Property Shop, said his company will in future insist that landlords produce evidence that they have the correct permission to rent out mortgaged property.
Landlords with the Midlands agency will either have to show that they have a buy-to-let mortgage or a letter of authority from their mortgage lender, acknowledging that they know the property is being let out. Either would give the tenant some protection should the landlord go into arrears.
The check is being introduced after tenant Mathew Hall discovered that the flat he was renting was the subject of repossession proceedings just three days after he picked up the keys.
Initially, The Property Shop advised him he could not legally withdraw from his six-month tenancy agreement and it was still possible the landlord would settle his arrears. But three weeks later, a court order was sent to the flat advising that bailiffs would repossess it on July 26.
Mr Hall – who had himself been subject to tenancy referencing checks – moved out and was refunded his £500 deposit by The Property Shop which also released him from the tenancy agreement. It has also refunded him his first month’s rent plus £200 application fee.
However, Mr Hall had spent £500 spent on carpets and decorating.
Mr Hall said he was “staggered” to learn that although he had to undergo credit checks by the lettings agent, landlords are not vetted.
He told his local paper: “I went through a lettings agent because I thought I would get some protection. It doesn’t seem right that it’s not standard practice to check that the owners are paying their mortgages. I think things need to change.”
Mr Thomas said: “We are members of the Association of Residential Letting Agents and it is not their policy for mortgage checks to be carried out, nor is it standard practice within the industry.
“However, we view this issue very seriously and are contacting the association to find out why it’s not policy. If we can instigate changes then that will be something good coming out of this.”
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Comments
Further to the comment by David on 2011-08-05, tenants are also human and may have had difficulties that were beyond their control in the past. Just because one may have to file for bankruptcy, does not mean that they were unable to pay their rent. As a matter of fact, rent is the one thing that cannot be simply written off in bankruptcy, and actually if a perspective tenant has been released from their bankruptcy they should have no other debts and should then be able to pay there future rent with no problems, as you cannot file again for bankruptcy for at least 7 years without exceptional circumstances. Bankruptcy is designed to give someone a fresh start, another chance to do it right. Therefor forcing people to live in substandard housing because they can't pass the usual checks, doesn't give them the incentive to continue working and getting it right.
On the other hand those with excellent credit references can continue to build the debt and can at any point face unexpected circumstances and struggle to pay the rent.
I am sorry the tenant in the article has suffered and believe it could not have been avoided.
It is not practicle to check every landlords financial status. This can change daily / weekly / monthly and yearly. You might get a landlord credit checked then he / she may die, get divorced, other tenants fail to pay the rent or the landlords other business interests go wrong. Therefore, a snap shot credit check is really pointless. And to add a bit of balance a credit check on a tenant really is a similar snap shot. The tenant may suffer similar fates as landlord such as redundancy or if they are self employed go bankrupt.
Unfortunately, the tenant lost money by buying carpets etc. Maybe if he had found a better property then he could have avoided this cost. I always make sure my carpets in properties I let are good and clean.
At the end of the day being a landlord is a business and just like any other business they can go bankrupt. Maybe tenants should be able to buy insurance for letting just like landlords buy insurance for buildings and non paying tenants ! Other than that I don't think its possible do do any more in a practicle manner. The tenant should be thankful he did not loose his rent / deposit thanks to the deposit protection schemes in use.
I am a Landlord and I think vetting for all Landlords is an excellent Idea. If you are a good landlord it can only be to your advantage