What does the future look like for tenant referencing?
Published on 18th July 2019 by Laura West
Low risk renting is the preference of all parties, but unless lawful guidelines are adhered to, it’s difficult to recognise if a tenant will be reliable.
Without engaging thorough tenant screening, private rented landlords risk significant damage and loss of income in their property, alongside the stress and anxiety of attempting to solve any issues.
Although this has not always been an issue, a lot has changed in the sector in recent years. Once an industry which thrived on local expertise, trust and personal relationships, the sector is now unrecognisable because of its use of technology and extremely diverse range of applicants.
It is clear that the responsibilities connected to letting property have become more complicated, due to compliance and legislation.
Currently, the Right to Rent scheme still remains the responsibility of letting agents and landlords as part of the daily checking procedures, alongside complying with legal obligations, identifying fraudulent documents and applications and complying with money laundering regulations.
With tenant referencing playing such a vital role in the lettings procedure, the relationship between letting agent and landlord should be valued. Having the ability to depend on the expertise of knowledgeable and skilled agents is beneficial to most landlords who are searching for trustworthy tenants.
Concern over what happens once the fees ban is implemented in law is reasonable, and there is genuine worry about the ways in which potential losses can be offset once the responsibility to pay for referencing falls to agents and landlords instead of tenants.
Although a difficult prospect, the requirement for referencing applicants and any associated risk will remain the same after 1st June 2019, and it is vital that agents prepare for this.
Resist the urge to make quick fixes, such as downsizing to economy products or reducing the amount of applicants referenced. Corners can easily be cut in a range of different ways, but problems can arise by doing so. Referencing processes cannot withstand potential challenges, and problems can arise which lead to a breakdown in trust between agents and landlords.
Landlords trust agents to get the referencing process right, while protecting them from costly and long eviction processes. Conducting tenant referencing yourself or cutting back on services could prove a false economy which would damage your brand and reputation in the long term.
The majority of property agents rely on referencing from third-party companies, and for good reason. With an in-depth process which utilises the best property management software, the services of reputable tenant referencing companies will save effort and time, as well as providing a straightforward report once the checks are completed.
Relying on the service of a professional referencing firm provides peace of mind, and with the ban coming into force, there does not need to be a drop in standards of service provided.
Some landlords will likely choose to raise rents in order to balance the higher cost of maintaining services, but this route may not be sustainable. Discovering additional income sources to secure and protect the future of your work can help offset the fall in income. Incentivising appropriate insurance products and rebates are just two of the most accessible options, but with an active, positive approach, you can add more value to your business.
Property Deck enables professionals across the industry to manage people, properties and processes – all in one place. It’s totally free. and offers an impressive number of features and benefits – what have you got to lose? It’s the CRM for Property Managers and Agents.
Sign up here today.