Should I proceed with offering a tenancy agreement?

Should I proceed with offering a tenancy agreement?

9:29 AM, 23rd July 2021, About 3 months ago 46

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Hi Folks, Some sage advice please:- I’ve just referenced two lovely prospective tenants who have failed the comprehensive referencing.

They’re both clear of debt and have no CCJ’s,  there are good previous Landlord’s references and generally all-around decent reports. Both are considered “Medium Risk” according to the reports.

One prospective tenant is currently in receipt of Universal Credit, but anticipates returning to work as a self-employed chef (cooks for private dining) shortly and the other is in full-time employment.

According to the Rent Affordability Calculator, their combined incomes are just about sufficient to cover the monthly rent. Everything else on the reference reports are fine, but the referencing company has suggested that I proceed with a guarantor, which the candidates are unable to provide.

The candidates are offering to pay for a year’s rent in advance.

As I intend to purchase Rent Guarantee Insurance and as a condition of obtaining this, the candidates must pass the referencing, I’m apprehensive in offering them a tenancy.

Any suggestions would be gratefully received.

Thanks in advance!

Mark



Comments

by Jaye

14:05 PM, 23rd July 2021, About 3 months ago

1. No guarantor - Red flag No1
2. Universal Credit with a year's rent offer - Red flag No2
3. "just about sufficient to cover the monthly rent" but have a year's rent to pay? Red flad No3
4. The fact you have to ask in this forum - Red flag no4...follow your gut instinct. I had lovely prospective tenants who ended up owing me £20K.
Besides, the Previous landlord could be their friends
By any chance, did they say" do not visit the property within the year?"

by Cathie

14:07 PM, 23rd July 2021, About 3 months ago

Remember before Shelter er al lobbied for 5 weeks max deposit to ‘help tenants’? You could have taken a 6 month deposit and rent monthly in advance as normal. That would have given you both a safety net if you had to evict and given the tenants more of a chance to find a place to rent.

by Richard P

15:11 PM, 23rd July 2021, About 3 months ago

Got to use your own commercial Judgment, But 12 months upfront and they are looking for a job probably due to Covid , I would take them

Not sure you will get rent guarantee, but you guaranteed 12 months anyways.

I have taken on worse , but with good personal references and my own judgment and never had a problem, yes there is risk in renting what ever you do

by Jo Westlake

15:29 PM, 23rd July 2021, About 3 months ago

Referencing is a nightmare at the moment. They simply do not understand anything other than bog standard PAYE.
I do reference tenants and then use my own judgement if they fail. About 35% of my tenants have failed on something. Usually affordability where the referencing company has failed to take a part time job into account or doesn't understand self employed income. Or they're in a probationary period in their job. Or they're young and don't have a credit history.
Some of my best long term tenants would still fail referencing if they wanted to move house today, even though they have a perfect 10 year payment history and keep their homes immaculate.

Last May I let a flat to a young couple who failed referencing. Less than 12 months later they were granted a mortgage to buy a £325000 house.

So in my experience some very good tenants fail referencing. If they do fail ask them some searching questions. It may be that the way the referencing questionnaire was worded was the problem. They may not have mentioned their second job. They may have put historic income from the job they are just leaving instead of the much better income from the job they are just starting.

I also look at travel to work costs. If the property is close to their workplace there's at least another £20 a week in their budget as they're not having to pay for bus fares or parking.

The questions running through my head are:
1- Do I like them
2- Does the location work for them
3- Can I imagine them living in the property
4- How close to LHA level is the rent
5- Do they work in industries where it is easy to get another job

by peter-sharples@outlook.com

17:31 PM, 23rd July 2021, About 3 months ago

No chance never ever let to them this government is tenant focused you will be the only looser

by Mike

18:11 PM, 23rd July 2021, About 3 months ago

Totally agree with Jo Westlake, every thing we do is a gamble, no matter what, so take what you get for the next 12 months rent up front, least you have put off any problems for at least 12 months. Our lives are a gamble, today here tomorrow God knows where, and don't forget how Covid-19 just took away many people unexpected. End of the day these tenants need somewhere to go don't they.

by LaLo

18:28 PM, 23rd July 2021, About 3 months ago

You could always take them on then give three months notice and explain its only a safety measure as it could affect rent insurance - if you have any!

by Darren Peters

18:34 PM, 23rd July 2021, About 3 months ago

by LaLo

19:00 PM, 23rd July 2021, About 3 months ago

As previously said. The government are with the tenant as it helps get the homeless off their 'back' and on to the LLs 'shoulders' ! As the saying goes 'if in doubt leave it out' !

by Paul Shears

22:55 PM, 23rd July 2021, About 3 months ago

Reply to the comment left by Monty Bodkin at 23/07/2021 - 10:27well I don't know anyone who would guarantee my rent as a tenant and that has been the case for most of my life.
My parents might have done it but they never had the funds.
So that blows me out of the water as a tenant.


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