It sounds like a landlord’s dream come true: a shortage of rental homes, multiple tenants competing for each one, and rents going through the roof.
It’s the same story for almost every property to rent in YOUR TOWN, but the flood of enquiries can be overwhelming. So how do you avoid getting bogged down in a sea of viewings and admin?
Well, it’s a mix of who you naturally attract in the first place and how you filter out the crowd, which means boosting your understanding of:
- Why there are so many tenants.
- The best way to target high earners.
- How to screen people before viewings.
- Typical warning signs of problem tenants.
- The secrets of rigorous referencing.
Daunted? Don’t be! In this week’s blog, we’ll show you how we sort the great from the good, so you can be sure the tenant you pick is truly the cream of the crop.
WHY ARE THERE SO MANY TENANTS?
The sheer number of tenants looking to rent right now is higher than we’ve ever seen, and the factors causing an almighty squeeze between supply and demand include:
- Uncertainty over house prices is causing some tenants to pause before buying, keeping them in the rental market for longer instead of freeing up homes.
- People who do want to buy are taking longer to save up a deposit because higher rents are leaving them with less disposable income.
- Changes in taxation policy have caused heavily leveraged landlords to sell up and exit buy-to-let, shrinking the stock of homes to rent.
- This means that properties are usually only on the market for a matter of days and often have 30-40 tenants chasing them, pushing rents even higher.
There’s no denying how tough it is for tenants looking for a home right now, but with flattening sale prices and the highest yields we’ve seen for some time, it’s a good moment to become a landlord.
TARGET THE TOP OF YOUR MARKET
One of the most natural ways to attract the highest quality tenants is to make whatever rental property you own the best in its class. These are some of the measures you can take.
- Speak to local letting agents about the locations and types of property that tenants are prepared to pay the most rent for.
- Invest in premium-quality fittings to attract style-conscious people who value nice things – careless tenants often avoid higher rents and security deposits.
- Reconsider blanket bans on pets and children if your rental property is suitable for a family or pet owner: they’re often the most stable households.
Given the issues facing the sales market, now is the perfect time to target tenants with a homeowning mentality as they pause their buying plans to see how interest rates and house prices unfold.
SCREEN BEFORE VIEWINGS
With so many enquiries for every rental home, you could run yourself ragged with viewings. So rather than booking in anyone who asks to view, take a minute to explore whether a tenant is a good fit.
- Explain exactly when your property will be available and find out from each viewer if they’re looking to move at the same time (rather than, say, a month later).
- Mention any details that may affect someone’s lifestyle – an open-plan kitchen and living room or a single-size second bedroom are good for some but not for others.
- Be clear if you’re looking for a green-fingered tenant to care for your garden, or if any rules could influence someone’s decision (like bans on bikes in communal areas).
By filtering out the best enquiries before viewings take place, you can concentrate your time on the most suitable tenants, giving you less work upfront and also later on if you receive multiple offers.
WATCH FOR WARNING SIGNS
Unless you’re out on viewings every day, it can be tricky to judge who might be the best tenant for your property, but there are some questions you can ask and checks you can make to spot red flags.
- Someone with a dog who leaves it alone all day while they’re at work is already displaying neglectful behaviour that could result in property damage and/or a nuisance to neighbours.
- Getting vague answers to why someone is moving, or objections to referencing and sharing financial details, generally make us quite wary.
- Anyone asking if the rent is negotiable or if the security deposit can be reduced or waived might be showing signs of financial difficulties that could become yours.
All of this might seem like splitting hairs, but you have a wide choice of potential tenants at the moment, and it’s vital that whoever lives at your property is conscientious and can comfortably afford the rent.
GO FOR RIGOROUS REFERENCING
Regardless of how well you get on with a potential tenant, it’s absolutely essential to carry out thorough background checks before giving anyone the keys to your rental property. Make sure you get:
- Previous landlord’s reference, followed up with a phone call to see if it reveals more than the standard written reply.
- Credit report and address history – someone who says they’ve been living with parents could be hiding previously unpaid rent or bad debts.
- Employer’s reference and payslips (or accounts for anyone self-employed) confirming income, role and how long they’ve been there.
- At least three months’ bank statements – a constantly and heavily overdrawn account that’s full of takeaways and luxury spending can indicate poor financial management.
- Carry out the same checks on any guarantors and ensure they understand they’re responsible for covering unpaid rent and any damages beyond the security deposit.
- Avoid accepting six months’ rent in advance instead of references – it’s not necessarily the sign of a good tenant and is a tactic often used by people with a poor credit record.
We should point out that most tenants are completely honest, but if you look at where things go wrong, it’s very often because the groundwork in the selection process wasn’t thorough enough.
What’s your next step?
If you have a property to rent and you’d like to turn it into a magnet for the best tenants in town, why not get in touch?