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10th January 2012

ARLA: Tenant referencing could become even more important in 2012

“Landlords have been encouraged to use property management services to carry out full background checks on prospective tenants.

 

According to the Association of Residential Lettings Agents (ARLA), tenant referencing could be set to become an even more important tool for landlords in the near future as rising rents and an unstable economy make it increasingly likely that a tenant could fall into arrears.

 

Asking for a background check to be carried out could help uncover whether or not the tenant's finances are healthy enough that they are likely to be able to afford the rent over the term of the tenancy.

 

"Creeping unemployment may have an impact on the financial stability of both tenants and landlords, which in turn may spark a rise in rental and mortgage arrears, and even repossessions," said Ian Potter, operations manager ARLA.

 

"While it is impossible to know whether someone will be solvent in the future, it is important to carry out relevant checks on a potential landlord or tenant, to look for signs of financial instability. We would always recommend that consumers rent or let a property via a licensed lettings agent, who will be able to carry out checks on their behalf."

 

Meanwhile, the organisation predicted that 2012 could see demand for private rented accommodation continue to rise, despite increased investment in buy -to-let properties, due to the sluggish housing market preventing many from buying their own properties.

 

"Almost three quarters of ARLA members (74 per cent) already report that there are more tenants than available properties, and this is a story we're likely to see worsen," said Mr Potter.

 

"However, there is some anecdotal evidence in parts of the country that stock levels of rental property could be increasing."

 

While increased demand is to see landlords enjoying rents, it could also lead to more tenants falling into arrears.

 

We asked Gareth Glover local lettings expert and owner of lettings specialists Martin & Co in Truro if he agrees.

 

Gareth said “ without a doubt, in the countries current economic climate it is vital that Landlords need to ensure that their agent has a comprehensive applicant referencing process in place”. “It can really be the difference between a dream tenancy or a nightmare”. “Most reputable agents will use a tenant referencing company to carry out their referencing needs because on the back of those references an agent can often offer rent guarantees”. “As these referencing companies are specialists at what they do they generally provide a much better quality of reference compared to an agent carrying out their own. Like some other letting specialists who use any number of referencing companies out there, we at Martin & Co have used the UK’s number 1 preferred referencing company for years to ensure that our landlords have as much financial protection as possible”.

 

You have to remember that Mr Potters statement is a general sweep of their members within the United Kingdom and by mentioning that, although 74% of his members report increases in tenant levels, it still leaves 26% where tenant demand is falling as stock levels rise.

 

Gareth finished by saying “ It is important to speak with your local lettings specialist who will should be able to advise you of the current local market conditions. But again the best rule, like in most cases is to shop around because all agents really are not the same”.