Landlords tighten checks and demand guarantors

Almost four in 10 landlords have tightened tenant referencing or affordability checks since the main Renters’ Rights Act measures took effect, while 32% now ask for a guarantor where they previously did not.

Property management software firm August’s latest Landlord Survey, which questioned 276 UK landlords, found that 39% had tightened checks, rising to 41% among respondents in England.

The changes follow the introduction of the Act’s main measures on 1 May.

Just 10% of those surveyed said they had changed nothing.

Act’s big change

The firm’s chief executive, Richard Samuel, said: “A year in, the clearest change the Act has made is at the start of a tenancy, not the end of one.

“That is a sensible response, as long as it rests on a consistent process rather than blanket rules.”

He added: “A landlord who applies the same checks to every applicant and records why each decision was made is better protected than one who asks everyone for a guarantor.

“That protection will matter more once the landlord database and ombudsman arrive.

“Blanket rules also turn away good tenants and leave homes empty for longer.”

Tenant selection concerns

Vicki Hextall, area manager at East Midlands Property Owners (EMPO), said: “Landlords aren’t walking away from the sector, they’re becoming more careful about who they let to.

“With almost four in 10 tightening their referencing, it’s clear landlords are managing risk now that regaining a property takes longer and is less certain.”

She added: “The concern is that tenants with thinner credit histories or irregular incomes find it harder to get a foot in the door.”

Checks and asking rents

Landlords with five to nine properties were the most likely to have introduced guarantor requirements, with 54% doing so and 46% raising asking rents.

Across the sample, 33% had raised the asking rent on a new let, while 26% had increased rent on an existing tenancy.

More than half of single-property landlords, at 56%, said they had changed nothing.

Among landlords with 20 or more properties, 37% reported having served or begun a possession claim, compared with 20% overall.

Landlords’ next moves

Looking ahead over the next two years, 29% of respondents planned to reduce their portfolio or sell all their properties.

A further 34% intended to expand and 29% expected to keep their portfolios the same size.

Asked about their next vacancy, 69% said they would relet the property.

So far, 15% had decided against reletting a property and 13% had sold or listed one.