Landlords urged to check tenants’ backgrounds

Landlords are taking unnecessary risks in the current economic environment by failing to adequately check the background of prospective tenants, according to buy-to-let specialist Paragon Mortgages.

With unemployment and the general cost of living rising, and household budgets coming under increasing pressure, landlords have to minimise the risk of exposure to tenants who could run into arrears.

A comprehensive tenant assessment allows the landlord to verify the tenant's identity, employment status, creditworthiness and financial history. Conducting a tenant assessment reduces the risk of the tenant defaulting on payments or absconding from the property without paying rent.

According to Paragon research, nearly a third of landlords (32%) never carry out a tenant assessment on a prospective tenant, with a further 22% stating that they only check new tenants occasionally.

This is despite the fact that over a quarter of landlords (26%) have experienced a tenant leaving a property without paying the rent, while 14% have been forced to evict tenants for failing to pay the rent.

John Heron, Paragon Mortgages' managing director, said: ‘Tenants leaving a property without paying rent is a more common occurrence than people think and a large number of landlords will experience this problem at some point.

‘We could see a spike in the number of tenants bailing out from a property without paying rent in the current economic environment as unemployment rises and increasing numbers of households struggle with their finances.

‘Landlords wouldn't buy a property without making the necessary checks, so why would they let somebody rent a property without carrying out a comprehensive assessment first? Carrying out a tenant assessment for prospective tenants should be part of a landlord's everyday business plan.'

Landlords can obtain a fully comprehensive tenant assessment for just £25 plus VAT through Redbrick Tenant Assessment, a Paragon Mortgages' sister company. The assessment includes a credit check, verification of employment status and income, a current or previous landlord referral and an Electoral Register check. Alternatively, landlords can choose to carry out a Credit Check Assessment on their prospective tenant for just £9.99 plus VAT.

Redbrick Tenant Assessment's services will be sold primarily via mortgage intermediaries and lettings agents, although landlords will also be able to purchase products direct through the redbrick-tenant-assessment.co.uk website.

Landlords obtaining a tenant assessment can further protect themselves by taking out Rent Guarantee and Legal Expenses insurance through Redbrick. The policy starts from just £52.50 for six months and includes up to six months' unpaid rent cover should the tenant default and legal advisor costs of up to £10,000 if the landlord pursues the tenant through the courts.