Investing in the Private Rented Sector (PRS) can be extremely profitable, but there are times when issues, which are simply out of your control, can take a turn for the worse, and there are very few things worse for a landlord than a bad tenant.
Unfortunately, there are occasions when a tenant is not looking after the property or regularly failing to pay their rent on time, if at all, leaving landlords with no rental income and no alternative but to make a claim for possession of their property.
While measures such as credit checks and tenant referencing can minimise the chances of letting a property to bad tenants, there are no guarantees that what may appear to be a perfect occupant may turn out to be a tenant from hell.
To help reduce the risks, landlords have now been given the power to access more in-depth credit information about potential tenants and report payment history of rent payers to credit reference agencies, with the help of a new online tool.
The credit check service, which has been launched by Landlord Secure, offers landlords a comprehensive overview of a new applicant’s credit history by revealing if the applicant is in arrears with loans or credit cards, and even how much of their credit they are using.
Previously credit reference agencies were only able to provide identity verification, residential history and publicly available information on a tenant, such as county court judgement or bankruptcies, rather than giving an insight into their current credit status.
The new tool will allow landlords to view how many active accounts an applicant has and which are being paid on time, the total balance of unsecured accounts in the previous month and the “worst status” of any active accounts for a minimum timeframe of three months before an application was made. This will help to assess affordability and mitigate risk.
Landlord Secure has also recently launched another free tool, LateRent, which allows landlords to report payment history to credit reference agencies, enabling them to carry out robust affordability assessments on potential tenants.
Steve Burrows, managing director of Landlord Secure, commented: “Chasing late rent payments can be an all too familiar issue for landlords to find themselves in. Tenant vetting checks and referencing services are meant to help them avoid these problems but most are not comprehensive enough and the information they gather doesn’t present an accurate picture of an applicant’s current credit status.
“This new credit check service, coupled with the LateRent platform, will make it much easier for landlords to select the appropriate tenant. It will also enable tenants who pay their rent on time to build up a better credit history– which may help later if they apply for other credit or financial products.”