A growing number of London tenants are struggling to get through their reference checks because they do not met the salary requirements being demanded as rents soar.
Most credit referencing companies now insist that a prospective tenant earns around 30 times the monthly rent, or two-and-a-half to three times the annual rent. A tenant’s savings are not taken into account.
Rents have risen by as much as 20% in parts of London, according to agents Ludlow Thompson.
Lynn Hilton, partner for residential lettings at Cluttons, said that one in five tenants is now failing a credit referencing test. Four years ago, fewer than one in 20 failed.
Of those that fail, around half are opting to fork out a bigger deposit instead – up to a year’s rent up-front – or produce a rent guarantor who does get through the credit checks.
The problem of tenants failing the checks is even catching wealthier individuals, because for example, they do not have assets listed in this country for tax reasons, or because while they have savings, they do not have jobs.
Demand for high-end rental accommodation in London is rising, suggesting that the problem will not go away.
This week, Lucy Morton of W A Ellis said that her firm has recently completed on a particularly high number of deals, with a strong pipeline.
She added: “We have also noticed is that much of our student market has much higher budgets this year.
“We are normally inundated with requests between £250–£400 per week for one-bedroom apartments and £400–£600 for two-bedroom apartments, yet this summer we have seen one-bedroom budgets for between £400–£500 per week and two-bedroom apartments being requested for as much as £800 per week.”
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