Landlords now face the prospect of two unsuccessful tenant applications on average for every successful one, resulting in an increase in the length of time it takes to fill a property, according to online letting agent, MakeUrMove.
The letting agency has seen 67% of tenant applications rejected since the Tenant Fees Act was introduced.
These unsuitable applications could include tenants applying for a property they cannot afford, or not disclosing the possession of a CCJ or previous history of bankruptcy.
MakeUrMove managing director, Alexandra Morris, believes that the impact could lead to landlords having to increase rents in order to cover the cost of properties sitting empty for long.
She said: “What was intended to offer a fairer solution to tenants is seemingly leading to an increase in individuals trying their luck when it comes to applying for a rental property. The investment and risk once associated with applying for rental property have been completely removed, meaning many landlords are now left with rising costs and the prospect of empty properties for longer.
“The housing market in general needs an overhaul, but with the Tenant Fees Act now in place, it’s clear the referencing process is also an area which needs to be revamped. We need to learn from the processes used in online banking and create a tech solution which allows landlords and letting agents to conduct an instant financial check, which looks at a prospective tenant’s income as well as their past rental payments.”
Morris has also warned the government against plans to ban of Section 21 as this will almost certainly adversely affect many buy-to-let investors, leading to a potential mass landlord exodus from the market.
Morris continued: “While we support the government in making the private rental sector fairer for all, many of the new laws favour tenants over landlords. The government risks landlords leaving the market altogether as a result of the increased costs. This would then lead to a lack of supply, and the knock-on effect of rising rents as a result of the increase in demand for rental properties.
“We urge the government to take into account the impact that’s already being felt by landlords as a result of the newly introduced Tenant Fee Act, and ensure that they continue to support landlords under the new legislation.”
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The guidance clearly states that you must not waste a tenants time, so as only 1 holding deposit can be taken at anytime and the possibility of up to 15 calendar days wasted, a suitability questionnaire should be used to ensure a tenant can pass referencing before a holding deposit is taken. MakeUrMove should really review their procedures.
Hi Jonathan
Thank you for the suggestion. We have our own pre-check process and software, 2 out of 3 applications are rejected as a result of our pre checks. Our average let time is still the same but that won’t be the case across the industry.
Of those that move to full references we have a 92% pass rate.
We now issue an in depth questionnaire to all online enquirers before arranging viewings, over 50% do not respond Those that then view get a further questionnaire if they express interest, so far since June 1st over 30% have lied and then fail referencing!! Main reason are the self employed who either declare virtually no income or have no accounts at all and those who fail to disclose ccj or bankruptcy after being asked twice! They have nothing nothing to lose whereas before June 1st they stood to lose a fee for lying.
We don’t take the holding fee until we have vetted the application to a point we are happy to take them .. pointless exercise locking the property to one application
I agree
Jeremy Clarke,
Great idea to issue the questionnaire before the viewing so as not to waste the LA or LL’s time.
The results clearly demonstrate that prospective Tenants tell lies at the time of arranging viewing.
From LL’s perspective, it’s better to reject these tenants as they are more likely to need eviction notices, with potentially not paying rent & resulting in property damage, council/cab/police issues, related stress & legal costs.
Relatively speaking, less income is lost by an empty property than having troublesome tenants hence it’s an added value to do a thorough referencing, ideally ask for a homeowner guarantor to protect LL’s interests.
Until laws are changed to support LL’s instead of an imbalanced, unfair advantage to tenants, LL’s have to be extra cautious in referencing and take longer time to protect their position if need be.
If a public link is available for this questionnaire, which can help other private LL’s, kindly share in this forum. If not, no problem. Thank you.
Why not get the applicants to bring their own up to date Experian and another Credit Reference Agency report with them on their first viewing? No report - no viewing. Simple, and no need for landlords to waste their time and money.
A far simpler solution is to use LRS.
You send a link to tenants which once completed gives access to all 3 CRA for free.
Tenants then email the reports to the LL.
Costs nothing.
LL can then peruse and decide whether worth bothering with a viewing.
About 80% of tenants won't bother sending the CRA info so they effectively select themselves not to be considered.!!!
Robert Brown
I agree. Credit reports is one of the solutions to save time but LL’s are within their rights to ask for more guarantees and should do so to protect themselves against future problems from rogue tenants presenting a 5* credit report.
Going back more than 10 years ago when I needed to rent temporarily, one LA asked me on behalf of LL for Experian credit reports, 3 months wage slips, along with a Guarantor homeowner agreeable to 6 months rent payment in case of tenant default. I then insisted on an inventory report with working conditions of all fixtures along with the safety certificates paid for by the LL, which was duly provided.
It protects LL as well as the tenant in case of future disputes by having a clear financial, preferably criminal and other background checks about previous evictions/claims etc as well as an inventory report signed or agreed on camera (with GDPR consent) by both parties.
Albeit if these disputes reduced then council tenancy sustainment, homelessness/related teams and cab staff’s govt funding will be cut & they will be out of jobs hence they continue discrediting LL’s by placing an unfair, unbalanced blame on All LL’s rather than Tenant’s.
I still take an admin fee because nobody is enforcing this or any other rule. I only take cash and don't issue a receipt.
On risky territory.
Only needs a clever tenant to record a conversation and bang the TFA kicks in with the massive penalties for the LL.
Just not worth the risk.
To lose everything because of one scummy tenant.
I prefer the filter of FREE credit reports.
Nobody in the UK is unable to obtain their 3 free credit reports.
Those tenants that can't be bothered to obtain them for perusal by the LL need not be considered.
Savvy tenants will ensure they have their up to date credit reports for LL.
I simply would refuse to deal with any tenant applicant that wasn't prepared to show me their credit reports.
The same as I would require proof that if HB was being used that they could afford my rents.
Bring. It. On. I'm not worried. I've had done with Govt. rules that are not enforced. I've complied with everything thrown at us for thirty years and reported dozens of other agents/LLs for basic failures to comply (redress scheme membership being just one example) and there simply isn't the funding/desire to tackle it. I'm at a commercial disadvantage to all of these, so I'll be ducking that soon too upon renewal. ICO registration can take a hike too. Not bothering with CMP. I'm closing my office and going 'appointment only' because I see plenty of others operating from their own home, which the council never even know about, let alone visit...they do occasionally try to go after the 'low-hanging fruit' and because I have a shop front on a high street, I'm easy to pester (always been compliant up until now) but they never go after the real problem persons.
Luke P
Total respect for everything you state.
The majority of us LL are cowards and wouldn't have the you know what to respond as you are intending.
Yours are correct responses to bonkers policies being imposed on the PRS.
Many LL will have no choice if they want to survive than think asymmetrically like you.
We have already seen this with LL converting to short-term letting of various types which cannot be detected.
Personally my response will be to hopefully convert my portfolio into one resi property where I will take in LODGERS who will pay me no more than the RFRA of £7500.
Nobody will ever be able to detect if I receive more than that.
So a resi property I attend at least once per month should give far better tax free returns.
No CGT on any future sale of my PPR resi property.
I should be better off. The only downside I can see is the hassle of lodgers changing and that CG opportunity on multiple properties will be lost.
Had I known S24 was coming along I would have bought one 4/5 bed house and taken on lodgers.
But we are where are so I am going to attempt to achieve this.
Just a shame I've wasted 11 years housing people when I could have just housed 3 people with no tax losses at all.
Hi Luke
I feel the same way about Rent Smart Wales.
I have always complied with everything and declared all my income and I am now required to be licensed and registered with this debacle in Cardiff.
The only ones put out by this are the genuine landlords, who were doing everything right before the inception of this 'jobs for the boys' outfit.
The rogues are very unlikely to register and they are not pro-active in seeking these out, preferring to leave it up to the tenant to complain to them.
Honestly, 'they are about as much use as a chocolate teapot'.
Well said John
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