Landlords, Be Diligent - Credit Reference Your Tenants!

It goes without saying that the economy is on its back foot and with National employers such as Woolworths, MFI, Land Rover and BT making redundancies across the country, Landlords need to be extra diligent before signing on the dotted line of the Tenancy Agreement.

So before you go ahead and sign up your tenant there are a couple of things you should be looking at to try and build a profile of your tenant and even though I would always recommend a credit check on your tenant, there are other ways to weigh up the likelihood of whether you have a "good tenant" or not.

These are the steps I would take with all my tenants:

1 ) Three months rent in advance - if you can. If you don't ask, you don't get.

2 ) Employers Reference - On too many occasions, I have seen Landlords and Letting Agents accept a letter from the Employer saying that they are employed and confirmation of their salary. This is OK, however, if you are to be thorough, you should also seek to understand the financial stability of the Employer. My first step would be to visit the Companies House website and for £2.00 you can order the last years set of financial accounts. I would suggest that you are diligent with this and do not assume that as it is a big Company, there won't be issues.

3 ) Previous Landlords Reference - Again, be extra diligent. It is not too difficult to falsely impersonate a landlord and write a glowing report on behalf of a tenant. I am not saying that this happens a lot however, if you are going to be extra diligent, try and get a contact telephone number for the Landlord and call them or request a copy of the old Tenancy Agreement.

4 ) Guarantor - there is no line that must be crossed before you can ask for a Guarantor - most letting agents will ask for a Guarantor agreement if the tenant is either a) unemployed b) they have CCJs or c) are on Local Housing Allowance or Benefits. You can ask for a Guarantor to sign an agreement to say that they will be responsible for the tenants financial and performance liability of the tenancy agreement. This will give you extra protection.

5 ) Rent Guarantee and Income Protection - For a small fee in comparison to your annual rent, it is absolutely worth it. To know that your rental income is guaranteed during the period of your tenancy agreement is an absolute must. Most of the companies that offer a Rent Protection scheme also throw in a few thousand pounds for Legal expenses too!

6 ) Credit Check - Ensure that your tenant(s) provide you with an up-to-date credit check. The tenant can visit Credit Expert by Experian to produce a free credit check, and if they are happy to show you the outcome of the check (as data protection will be in force) and as long as it is clear, you know that the Tenant does / does not have a poor credit history. You will be on the lookout for CC J's (County Court Judgements). These are unsatisfied bills that have gone to court. Be aware that on occasion, there can be a valid reason for a CCJ, such as moving address and forgetting to cancel a bill! If you do not seek a credit report from the tenant, you may wish to use a Tenant Referencing Agency, however, there will be a charge for this.

7 ) Request a Security Deposit - I am sure that you are aware by now that all deposits must be placed with a Government Backed Deposit Scheme otherwise you could be slapped with a fine 3 times as much! I would always ask for 6 - 8 weeks deposit, NEVER one month, as the temptation for the Tenant to use the deposit as the last months rent is too great.

8 ) Professional Property Management Software - Do it right! Even if you only have one property to manage, a lot of these software providers also include tenancy agreements, letters, reminders etc.

9) Get the right level of Buildings and Contents Insurance - I read somewhere that the majority of landlord and tenant insurance claims result from wine being spilt on carpets. Ensure that you choose a Landlord insurance provider that covers property that is occupied by tenants. And as an extra precaution, check to see what level of unoccupied cover they offer as most insurers only provide 30 days.

No one has a crystal ball and it is always going to be difficult to "judge a book by its cover" so please take all the necessary steps to ensure that the tenant you have chosen for your property is the right one, even though you just want the property let!

Jonathan Daines Jonathan@LettingaProperty.com is Co - Director of LettingaProperty.com, a property search portal and information guide dedicated to the letting Industry. Advertising Letting Agents and Private Landlords' Properties to Let to thousands of Tenants every day.

Should I Join a Landlord Association? - UK Landlords

Investors who have recently become landlords as well as those that have been doing it for some time will eventually come across one of the 'trade' associations that claim to represent their interests.

The 3 main landlord bodies that exist in the UK are:

RLA (Residential Landlords Association)

NFRL (National Federation of Residential Landlords)

NLA (National Landlords Association)

What do they do?

Each organisation offers a range of benefits for their members, these include:

* discounts on products such as insurance

* produce a magazine containing articles giving tips and advice

* some provide free forms & tenancy agreements

* campaign and lobby on behalf of landlords with the aim that any legislation is 'landlord friendly'

* some offer training and courses so that landlords are up to date with the latest legislation, practice and procedures

Sounds great where do I sign?

All the above sounds great however the downside to membership is that it is not free. Basic annual membership costs between £75 - 90. In the case of the NLA one of the added attractions is that landlords have access to a telephone advice line. Landlords should not forget that whilst these organisations portray the image of being an organisation working tirelessly for their benefit; they are first and foremost a business. They need to make money to pay their chief executives, fund their rent and cover the expense accounts. They do this partly by levying their membership fee, but also by selling landlords products for which they get commission. In short they are a business not a charity.

Should I join one?

After weighing up the benefits of membership, the big question is should I join one? On the face of it there are very few benefits of being a member that can't be obtained for free elsewhere. Websites such as Property Hawk offer many of the member services offered by these organisations such as ASTs, information and articles without having to pay. We can do this because we do not have to support the costs of expensive offices, chief executives and other corporate paraphernalia. One of the other advertised attractions of membership of these organisations is that they offer specially negotiated deals and rates for members, such as discounted insurance. Again these rates are often nothing different to those provided by other intermediaries. Property Hawk has partnered with Alan Bosewell Insurance Brokers to provide discounted rates which are comparable.

The one useful function that they do provide is the facility to represent the wider interest of landlords. It is undoubtedly true that the associations do play a useful role in lobbying against some of the more draconian and poorly thought out legislation emanating from Government. What is not clear however is how much of their budget they actually spend on it in relation to other expenses such as wages, pension and running costs. I suspect it is relatively small. The Associations also produce a magazine, which contain some useful and interesting content. The question is that is all this worth £75+ per annum; you may think it is and if so you can always offset it against your rental profits for tax purposes.

Which one should I join?

Personally, if I were to choice one to join I would probably go for the NFRL. This is because the NFRL is actually an umbrella organisation for over 40 local branches. When you join your local organisation you will also obtain membership of the national body. Subscriptions are generally cheaper than the national associations. For instance membership of my local branch; the East Midlands Property Owners (EMPO) is currently £55 and this entitles you to a discount of £60 from the HMO licensing fee. Being a member of a local organisation means that you stay tied in to local issues. This is becoming increasingly important as much of the new legislation such as HMO licensing often has to be interpreted by your Local Authority. The thing to be aware of is that the quality of these local groups is variable, depending very much on the time and resources that the voluntary committee can devote to running them. I must add my local group EMPO is very good.

My advice is therefore think very carefully about what you are getting from membership before signing up. It may well be that you are actually paying to keep a load of executives in expensive suits, when in reality most of the benefits they offer can be had for free.

Chris Horne has 20 years experience as a property professional having worked for companies such as English Partnerships and Drivers Jonas as a planning and surveying consultant.

He now works full time as a investor and property developer.

He also has developed the site Property Hawk targeted at UK Landlords it provides FREE Property Management Software.

Property Hawk also includes a mass of Buy to Let targeted information.

propertyhawk.co.uk is the Landlord's Homepage