In the first of a series about the nuts & bolts of successfully renting out your property, we look at why tenant profiling is so important and how to read between the lines of a tenant profile. We’ve all heard nightmare stories about delinquent tenants, but there are many steps you can take to mitigate against this risk. At Rentmaster we study all aspects of an applicant’s financial situation to build up a reliable picture of their suitability.
The first thing we look at is the applicant’s credit-worthiness. We do this by drawing a TPN credit report. TPN is a credit bureau that specialises in property rentals. The report will reveal the applicant’s payment history – has she paid her bills on time or does she habitually pay late? Perhaps she only makes part payments? Any judgements of debt against the applicant will also be included in the TPN report.
The next important issue is affordability. As a rule of thumb, the applicant’s payslip must show that she earns at least three times the rental amount. It is more difficult to determine affordability if the applicant is self-employed and therefore doesn’t have a regular income. In this case we like to dig a little deeper and we might ask for the company’s bank and financial accounts. Similarly, if an applicant earns commission we might ask for twelve months’ bank statements to build a better picture.
The report also contains her retail credit commitments – credit cards, vehicle finance, store cards, mobile phone accounts, unsecured loans – any debt that she has to pay off on a monthly basis.
Step three is to compare the information from the credit report and the affordability test with the financial declaration on the application form. It is important that there is no contradictory information – if there is, we may request more information or, if we suspect that the applicant has been untruthful, reject the applicant.
Choosing the right tenant is one of the most important steps in the property rental game.