With rents continuing to rise across the UK, fresh research shows that those looking to rent increasingly need to earn more to satisfy the income expectations harboured by some landlords.
While the average annual salary in the UK is around £27,600, 19% of landlords would expect a rental applicant to be earning at least £30,000 a year before they would consider their application, according to a new report by tenant referencing and insurance agency Landlord Secure.
It has been suggested that a lack of understanding about the UK credit market is just one reason for these high wage expectations, with almost half - 47% - of landlords believing that those on higher wages will automatically have better credit scores and a better financial footprint – which is not always the case.
But despite this, there are some landlords that do have more realistic expectations for their applicants and just over a quarter - 26% - would be willing to consider tenants earning at least £15,000 a year while nearly one in five would not dismiss those on minimum wage.
Steve Burrows, managing director at Landlord Secure, said: “Landlords obviously want to feel secure that any new tenant is able to meet their rent commitments over the course of a lease agreement but it is unrealistic to only accept tenants on higher wages.
“Choosing the right tenant should be based on their current financial stability, which is not always linked to earnings and those earning less but with a history of meeting payments should be given equal consideration.
“Enabling landlords to access an applicant’s credit score should be an integral part of any financial check and it would serve as an incentive for tenants to pay their rent on time if they could build a better credit score in the same way those with a mortgage can.”
Additional findings from the report show that some landlords would expect an applicant to have been in a stable financial position, with most - 28% - expecting any new tenant to have been in a “strong” position financially for at least six months prior to their application.
Others would be much more cautious when it comes to an applicant’s financial history and 21% would expect any applicant to have had sound finances for at least a year before signing a rental agreement with them.
Much more stringent are the 14% of those surveyed who said they would not expect an applicant to have ever gone through tough financial times and would consider not signing an agreement with them unless they could show an impeccable financial history.
Burrows added: “Most landlords do not currently have access to an applicant’s financial history but this is clearly an important issue for them. Landlords should challenge their letting agents to ensure they are conducting thorough credit references on tenants, including detecting arrears and non-payments.
“The market also needs to do more to provide the kind of products that allow landlords to get the full picture of their tenant’s financial status so they can make better decisions that work for them and ultimately the tenant.
“To help Landlords see the benefit of true credit information, at Landlord Secure we are offering free credit checks for a limited time so they can see the comparisons first hand.”