Tenancy referencing and insurance firm PropertyRisks has warned that references must be taken out on tenants’ guarantors – and not just the tenants themselves.
Nigel Atkinson of PropertyRisks said: “The latest research on student rentals indicates that this year rents have risen by 3%.
“Not surprisingly, London has reached an all-time high, but some more unexpected locations such as Leamington Spa, Newcastle-under-Lyme and Bangor have experienced double-digit rises.
“This situation is reflected on the broader rental scene where there is strong demand that will push rentals higher.
“At the same time, the economic situation means that more people are likely to be renting for the first time and, like students, may not have any rental history to base a reference on.
“In such circumstances it is common practice to have a guarantor for the rent, but it is essential that the referencing process also includes validation of that guarantor and verification that they are in a financial position to fulfil their obligations under the rental contract.
“Landlords can, of course, protect themselves with legal expenses and rent guarantee cover, but this will be dependent on satisfactory referencing of both tenant and guarantor.”
Atkinson also warned that any information provided by a tenant or their guarantor should not be taken at face value.
He said robust tenant referencing should extend beyond simple credit checks and employer references to verification.
This should include authentication to ensure that the tenant is who they say they are, checking of linked addresses, validation of employer references, and tenant history. This verification should also extend to any guarantor involved.
Atkinson said: “A guarantor should be as carefully referenced as the tenant themselves: after all, they will be the party that needs to be pursued if the tenant defaults.
“As with employer references, it is important to be sure of the source of the information. Guarantors using personal email addresses such as Hotmail or mobile telephone numbers should only be accepted if they have been verified and authenticated with a full audit trail to support.”
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Comments
I have had worthless guarantor applications with fabricated information provided and when challenged because the info does not stack up they run away.
Jasmine the Industry Observer and IHS make good points. Learn from this information. Its all very well meeting face to face and is important but the information provided must check out. If it does not then do not buy the problem.
Had one applicant who argued with my checking fee which is less than others charge in this town. I got rid of him and he was not at all happy. I advised my landlord that this moaning would never stop and that I had ditched him and my client just laughed and said well done for looking after my interests.
@ Jasmine
Welcome to the industry!!
And one of its trickier areas!
ID is a critical area for agents as my company has found out fortunately not to its cost on two occasions this year when the victim (along with the landlord) of clever fraudsters.
The sad truth is if wellorganised and set up it is almost impossible not to fall for a clever fraudster as they will have covered all bases in terms of the contacts being made by the referencing company to verify the details given on the application form - which is all the referencing company can go on unless you give them anything else.
They will usually have one well run bank account which will be given for reference purposes, and may even have one 'controlled' CCJ for a tiddly amount years ago ane easily explained that they are happy to be unearthed.
Neddless to say the Landlord and employer referees will be organised so that friends or themselves can intercept and give glowing references.
All you can do is as much as you can starting with using an independent professional referencing compoany because at least then under the horse kicks dog, dog bites cat, cat bites mouse etc routine if you get sued by a disgrunteld Landlord you can immediately sue the referencer.
Do it yourself and you are on a hiding to nothing.
By the way do not believe anyone who tells youthay can "spot a bad 'un" and "that the hairs on my neck will tell me" as though they have some secret antennae that somehow enables them to tell a bad prospect. I spent over 20 years dealing with references and approving quite large amounts of mortgage money for a major building society and plenty of bad 'uns got past me!!
As a matter of interest, how do other firms truly check out guarantors? We try to meet them face to face wherever possible when dealing with students, and ask them to bring photo ID, etc. If the guarantor understands the potential responsibility involved, it doesn't seem a problem.
I agree with the story to be very wary about Hotmail and similar addresses and I always want at least one land line. A mobile no could just be a pay as you go.
I am fairly new to lettings, so trying to do things as well as I possibly can. I obviously don't have the experience of other posters, but I don't think in this day and age you can be too careful.
I agree with the last two posts.
A competent agent knows all of this.
In my view this is advertising aimed at negligent or ill informed "agents" by PropertyRisks to gain business for themselves.
Tenant reference = a fee
Guarantor reference = a fee
Nothing wrong with advertising their firm and product on the right of the page, but why on LAT Headlines for free (?)
I entirely agree with Industry Observer - the whole point of having a Guarantor is because the tenant will not pass referencing so the Guarantor is referenced instead and the same checks carried out as if they were the tenant. If you do not check the Guarantor then they are worthless and could be completely ficticious!
Another complete non story.
This forum is presumably primarily aimed at letting agents - any that does not reference the Guarantor should be closed down as incompetent.
As it is any that does not will have the pants sued off it for negligence and quite right too as if a Guarantor is taken usually they are more important status-wise than the tenants.
What on earth prompts people to write these articles and dare I say it LAT to post them? This one is almost as bad as the one from the London agent a few months ago pontificating about the dangers of periodic tenancies.
It's just publicity seeking for the writer's company name and LAT should vet such articles more closely