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12
May
2014

The importance of performing background checks on new tenants

One of the most pressing worries for landlords is the prospect of nightmare tenants. Whether you’re just embarking on your buy-to-let adventure, or you’re a seasoned landlord veteran, errant tenants can derail the most efficient of operations.

Performing astute background checks on tenants lies at the heart of avoiding costly issues later on down the line – but just what should private landlords be looking out for?

Although landlords can only do so much to prevent problem tenants, it’s vital that those in the buy-to-let market do everything in their power to lessen their exposure. Here are mydeposit Scotland's top tips to try and give yourself the best chance of avoiding problem tenants.

Take the basics seriously

Sourcing basic initial information and references from previous landlords forms the backbone of all background checks. As a bare minimum, look to retrieve the following information from would-be tenants:

  • Name, date of birth and contact information
  • Two personal character references
  • At least one reference from a previous landlord
  • Proof of identification
  • Bank statements/utility bills for the past three months (proof of address)

The key element to successfully getting the basics right, is to reaffirm the initial information that a tenant has disclosed. From requesting to see a tenants passport to confirm their identity, to viewing a utility bill to check their current address, don’t take any information provided at face value.

You may also wish to see assess a tenant’s ability to pay the rent on time, by asking to see proof of employment. For landlords with deeper resources, performing a full tenant check on prospective tenants is also a popular way of ascertaining their credentials. Always ask tenants for permission before looking to do so.

It’s good to talk

If after performing initial checks you’re happy with what you’ve seen, it’s then important to get a better idea of a tenant’s character. For some landlords, this might just mean a quick chat while showing them around your property. But no matter how pleased you are with what you’ve seen from prospective tenants, it’s important to gauge their character for yourself.

This doesn’t have to mean an exhaustive interview process, but whether it’s a talk over a cup of coffee or a short meeting at home, make sure you take the time to get to know tenants during the application process.

Look to ask questions beyond the normal enquires surrounding their job security and past rental experiences. Try to get an idea of their lifestyle; do they appear reckless? Do they have a penchant for the spontaneous? Talking to a prospective tenant doesn’t mean making too many assumptions. But ensure that you’re able to gauge a good idea of the person behind the basic information and any suggestions that they may be unreliable.

Putting references into practice

If a tenant’s basic information checks out, they’ve passed a tenant reference/ check and successfully impressed you face-to-face, it can be tempting to hand over the keys there and then. Yet while these points play a crucial part in helping you choose a tenant, references are one of the most important tools you have – so make sure they’re utilised!

Even if a tenant’s credit history is impeccable and they appear financially stable, how they have behaved under previous landlords is still your most important market. Ensure that you always follow up and get in contact with landlord references, no matter how impressive a prospective tenant appears.

Although the process of background checks can feel exhaustive, putting the hard work in now can help prevent serious trouble later down the line. Remember to be thorough, inquisitive as well as pragmatic when going through the process. Focus on attention to detail and there’s no reason why your background checks can’t help you find the perfect tenant in no time.