Do you really know who your tenants are?

Many landlords will have experience of tenants who are not exactly what they would like you to think they are. In most cases, this will not result in financial loss, but if you are saddled with tenants who turn out to be habitually bad payers, or worse, are actually criminals – perhaps planning to use your property for illegal ends such as cannabis growing – you could stand to lose serious money.



It is, of course, possible for property owners to purchase legal expenses insurance and this can be extended to include (some) loss of rent and the cost of repossessing your property; this should be an essential form of cover for every landlord. However, the management time involved in sorting out this form of legal wrangle – not to mention the potential damage done to your property should unsuitable tenants take possession – makes it advisable also to take preventative steps.



Fortunately, it is possible to arrange for tenants to be properly referenced before they are able to move into your property. These checks can be easily arranged and cover not just income and a six-year credit history (including for County Court Judgments and bankruptcy) but also validation of references from previous properties they have leased and any history of arrears or repossessions.



Having this sort of information enables you to make an informed decision regarding whether they are suitable tenants for you. And because the checks are undertaken by a professional organisation on your behalf, they are less susceptible to manipulation (although no system is foolproof, so there is no substitute for also conducting a personal interview either directly, or via a trusted agent). Obtaining references is also important because failure to do so could result in your buildings insurer rejecting a claim for malicious damage by the tenants (where covered) on the grounds that you have not taken reasonable precautions to prevent a loss from occurring. It is also possible to arrange credit referencing for commercial property; the process is similar but also, of course, includes insolvency in the case of a corporate tenant.



Taking the precaution of seeking proper references is not only good practice; failure to do so could affect your right to claim under legal expenses insurance. Having the process undertaken professionally gives you an added layer of reassurance that you have done everything possible to protect your investment, your landlord insurance cover and your peace of mind.