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The tenants living in your property can significantly shape your experience as a landlord. Landlords prioritising meticulous tenant screening often spend less time and resources managing their rental property.
On the other hand, landlords with less thorough screening processes may find their time and resources taken up resolving tenant issues, chasing payments, addressing property damages, and even going through legal disputes. Thorough tenant screening can help save landlords time, money, and hassle – so it’s well worth the effort!
In this article, we will explain what tenant screening is, why it’s so important, and provide a step-by-step guide to effective tenant screening.
What is tenant screening?
When screening prospective tenants, it’s important to never judge a book by its cover. Even with the best intuition, it’s impossible to tell from one or two conversations whether a person will be a good tenant or not. Tenant screening is a process that helps you to gather insight and evidence into a prospective tenant’s reliability. The process relies on factual information and historical behaviour rather than guesswork. This crucial step helps both landlords and tenants assess whether they are a good fit for a successful, professional working relationship.
What makes a good tenant?
All landlords want to let their properties to ‘good’ tenants. The first step towards finding quality tenants for your investment property is to define what makes a good tenant so you know what you’re looking for. There are a few characteristics of good tenants that are non-negotiable. First off, you need to know that they can make rent on time every month, so they must have stable employment and income. You should also feel confident that you can trust them to look after your property with care and consideration.
Key qualities of good tenants include:
- Reliable
- Trustworthy
- Respectful
- Good communicator
- Organised
As well as these qualities that apply across the board – depending on your goals as a landlord, you may be looking for tenants of a particular demographic. For instance. if you’re managing an HMO, you may prefer to rent to international students as they often pay a lump sum of rent upfront. If you’re looking for long-term tenants, you may prefer to rent to families or professional couples.
It is, however, important to remember never to judge a book by its cover, not least because you could be guilty of discriminating. Tenant screening should always be carried out fairly, consistently, and according to all relevant laws and regulations to ensure you do not discriminate. It is against the law to discriminate against tenants based on race, gender, sexuality, disability, or religion.
Benefits of thorough tenant screening
Thoroughly screening tenants is an investment in your rentals’ stability and profitability. It’s important to do everything you reasonably can to ensure your property is in the hands of reliable tenants.
Landlords who treat tenant screening as optional do so at their own peril. Screening potential tenants has many benefits and is a key strategy in mitigating risks for landlords.
Let’s find out some of the many benefits of taking the time to perform diligent tenant screening.
- Reduce expenses – When you thoroughly screen tenants, you are more likely to find reliable, quality tenants who pay rent on time and look after the property. This helps to minimise the risk of financial losses caused by unpaid rent or costly eviction processes.
- Minimise stress and hassle – Bad tenants are a landlord’s worst nightmare. Late payments, property damage, and anti-social behaviour can cause landlords significant stress and be time-consuming to manage.
- Maintain property condition – Responsible tenants are more likely to take good care of your property. This means less wear and tear and fewer maintenance and repair expenses.
- Protect the value of your investment – By maintaining the property’s condition and ensuring consistent rental income, thorough tenant screening helps to conserve and potentially increase the value of your investment.
- Avoid legal action – Proper tenant screening can help landlords avoid tenants who may engage in illegal activities or create situations that lead to legal disputes.
Screening all prospective tenants helps to lay the groundwork for a more successful rental business.
A step-by-step guide to screening prospective tenants
Reading the list below can feel a little daunting – it looks like a lot of work, right? We’re not going to lie; thoroughly screening tenants can involve a lot of admin and be quite time-consuming. It is, however, still preferable to the alternative. Landlords put themselves in a precarious position by failing to screen prospective tenants. If you fall on your feet and still land a good tenant, you’ve dodged a bullet this time. But if you’re not so lucky, you could find yourself lumbered with the stress, hassle, and expense of dealing with a nightmare tenant who stops paying rent, causes damage to the property, or uses it for criminal activity. Trust us, it’s not worth taking the risk.
Follow this step-by-step guide to screen prospective tenants and protect your investment.
Application form
Asking all interested people to fill out an application form to be considered as a tenant is an excellent way of pre-screening tenants to ensure they meet your basic requirements before taking things further.
You can customise your application form to ask whatever questions you feel are appropriate. Generally, the type of information requested on a tenant application form includes the following:
- Basic contact details – i.e. name, address, telephone number, email address.
- Employment status and salary.
- Details of other people who will be living at the property.
- Contact details for current and former landlords
You may also ask questions like:
- Do you have a criminal conviction?
- Have you ever been evicted?
- Do you smoke?
- Do you have any pets?
Meet them face-to-face
Property viewings provide an excellent opportunity to screen prospective tenants, so if possible, try to carry them out yourself; it can save you a lot of time and hassle later down the line. Use viewings as an opportunity to chat casually with prospective tenants and learn more about their character, lifestyle, and future plans. Usually, you’ll find you already have a gut feeling about whether they’re the right tenant for you and your property by the end of the viewing. If you didn’t do the viewing yourself, invite them back to pick up an application form, drop off references or paperwork, and have an informal chat then.
If, for some reason, you cannot meet them in person yourself, then a telephone interview or a Teams or Zoom meeting can be an effective alternative to get to know prospective tenants and run through a few important questions.
Employment reference
Once a tenant has shown interest in renting your property and you’ve carried out all the initial checks to assess their suitability, i.e. application form and an informal chat, then it’s time to verify that everything they’ve said is true and that they can afford the rent on the property.
The first step in this process is following up on their employment reference. Most landlords ask for the employer’s contact details and then request a letterheaded written reference from the employer confirming that they employ the tenant and how long they have done so for. Some landlords also request to see the tenant’s employment contract.
Financial proof
If this isn’t evidence enough, you are also well within your rights to ask to see copies of a tenant’s bank statements, job offer letter with salary, or payslips to confirm that they have a regular income and can comfortably afford to cover the rent payments.
Landlord references
Ask for the contact details of their previous landlords to contact for a reference. Their historic behaviour as a tenant can be the most reliable indicator of the kind of tenant they will be.
Revealing questions to ask previous landlords include: was the tenant ever late paying rent, and would you rent to them again?
Credit check
Non-payment of rent is a top concern among landlords. Although a credit check can’t guarantee that a tenant will consistently pay their rent on time, it does offer some assurance regarding their financial reliability. Performing a credit check is one of the most important aspects of tenant screening. The results of the check will provide you with valuable insights into the tenant’s past payment behaviours and financial stability, highlighting if a tenant has previously had problems with late payments, non-payments, bankruptcies, or CCJs. A good credit score generally indicates financial responsibility, but it’s important not to immediately dismiss a tenant because of a bad credit score, particularly if they are young and have never rented before. Tenants who have never taken out any credit before may appear to have a bad score because no credit data is available for them.
Right to Rent check
If you’re a landlord renting out a property in England, performing a Right to Rent check on all tenants is a legal requirement. Even if the property you’re managing is not in England, it is wise to carry out checks to ensure prospective tenants have the legal right to rent property there.
During a Right to Rent check, landlords must gather copies of documentation that demonstrate the tenant’s legal right to rent. The documentation required depends on the tenant’s nationality and immigration status.
You can find a detailed guide to acceptable Right to Rent documentation on the government website.
Social media screening
While not a formal step, some landlords also investigate prospective tenants on social media. Looking up tenant’s social media profiles can provide some additional insight into their lifestyle and character and can also be useful for verifying information given by tenants. However, remember that you should only review data being shared publicly and not try to connect with prospective tenants to view further information. It’s also important to remember that social media only offers a partial view of a person and should be used cautiously and ethically in any decision-making process.
During the tenant screening process, listening to your gut and trusting your instincts is important. Usually, you’ll get a feeling, whether positive or negative, about a prospective tenant fairly quickly. If you feel uneasy or alarm bells start to ring at any stage, it’s usually for a valid reason.
Red flags when screening tenants
Landlords should be aware of certain warning signs or ‘red flags’ to prevent future issues like non-payment, property damage, and other complications. Let’s explore some of the most common red flags that landlords should look out for when evaluating potential tenants.
Resistance to screening – If a prospective tenant hesitates or resists the screening process, this could be a red flag. A genuine applicant with nothing to hide will usually not object to the screening process. Avoidance could indicate they have something they don’t want you to discover in their history.
Poor communication – If a tenant is consistently difficult to reach or communicate with, this could reflect how they’ll communicate during the tenancy. Reliable tenants typically respond promptly and keep lines of communication open.
Lateness or no-shows – Regular lateness or failure to attend scheduled meetings or calls can indicate disorganisation or a lack of respect for commitments.
Inconsistent information – If the information a potential tenant gives you doesn’t seem to add up or is contradictory, it could signal that they’re not telling you the whole truth.
Unstable employment history – A history of frequent job changes without reasonable explanations could signal financial instability. Employment stability usually means stability in rental payments.
Landlords should not view tenant screening as optional but as an essential step in finding and onboarding quality tenants and safeguarding their investment. While the process can be lengthy, it significantly reduces the likelihood of encountering problems later and helps provide landlords with peace of mind and security.
