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Alfie Bear

Tenant Credit Checks

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Is it normal/standard for a prospective tenant to pay for the cost of their credit/reference checks?

I think I've tended to agree to pay for these in the past because the agency usually just stuffed them into their contracts, but in a renters market I'm unhappy in principle with the idea that I pay the landlord/agency for someone to check my credit (I know my credit is ok).

Is this just one of those things that you either bother to argue over (and risk losing a property you like), or turn a blind eye to?

Also, has anyone successfully attempted to run their own checks on a landlord's financial situation? Is there any way to find out if they have a mortgage on the property, and if so how large? Is it ridiculous to even ask as a prospective tenant for proof of his or her financial situation?

Any advice gratefully received, thanks.

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Is it normal/standard for a prospective tenant to pay for the cost of their credit/reference checks?

If it's via an agency, unfortunately yes (it is normal).

tim

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Is it normal/standard for a prospective tenant to pay for the cost of their credit/reference checks?

I think I've tended to agree to pay for these in the past because the agency usually just stuffed them into their contracts, but in a renters market I'm unhappy in principle with the idea that I pay the landlord/agency for someone to check my credit (I know my credit is ok).

Is this just one of those things that you either bother to argue over (and risk losing a property you like), or turn a blind eye to?

Also, has anyone successfully attempted to run their own checks on a landlord's financial situation? Is there any way to find out if they have a mortgage on the property, and if so how large? Is it ridiculous to even ask as a prospective tenant for proof of his or her financial situation?

Any advice gratefully received, thanks.

Yes, it's perfectly normal for a prospective tenant to pay those costs.

It's not just a matter of checking that your credit is OK, although that's important too. The company we use checks the electoral roll to see that you're on it at the address you've given, checks to see if you have any adverse credit, checks your employment status - do you work where you said you work, do you earn what you've said you earn, is the position temporary or permanent, etc. Provided that you come through the process, then the company will provide us with a rent guarentee insurance policy which would pay out if you didn't pay the rent. Now, because of that, they're going to make sure that you're as pure as the driven snow because they're not going to want to pay me or the landlord anything, are they? All in all, that's a bit more than just a credit check.

Now, although your credit history might be good, why should I believe anything you tell me? I've only just met you, you want to move into a property that's worth in excess of £100k as a guesstimate minimum, so of course I'm going to credit check and reference you. You could argue the toss with me about it, but if you did, you're not going to be moving into a property that I manage on behalf of a landlord. If you argue nicely, I might give you a discount on the application/referencing/credit checking fee, but that's about it.

If you ask me what I know about the landlord, then I'll do my best to tell you as much as I can. In the last six years, I can't recall any prospective tenant asking for a credit check on the landlord, but I suppose it's possible. I don't know if you'd be able to find out if they were in arrears with their mortgage, because that information wouldn't be publicly available and I'm guessing that only the landlord and his mortgage provider would be able to answer that.

So, referencing/application/credit checking fees are normal. Shop around though, because some agents charge more than others. We're among the cheapest in the area we're in, but that might be of no help to you.

It might be a good idea for tenants to find out as much as they can about a landlord, but what the process is is something I'm not sure of.

Hope this helps, if you've got any more questions, feel free to ask me.

Ged

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You can negotiate down the price to 20 quid per head. If you have payslips or some type of employment contract, that will often suffice.

When we rented, we refused to pay for a credit check and offered to show payslips instead. That worked for our LL.

The reason I refused a credit check was that the EA was asking for loads of information - if the data got into the wrong hands, it could easily lead to identity theft. Now, I will be willing to give details to a bank or major credit card company, where presumably they have reasonable data security, but giving to an EA and their related credit-check agencies (names I have never heard of), is a joke!

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Ged, yes I have a question for you. You state the importance of being on the electoral roll as a way of verifying that you live at the address that you have stated. What about non-UK nationals? I assume you deal with Australians, Kiwis, South Africans etc. who are over here for 2-3 years and in good jobs. Are they automatically turned down? I'm a US citizen and renting from a private landlord. Does this mean I have no chance of finding anywhere in future through a letting agency?

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And another question. You have two tenants for the same property:

TENANT A - has a flawless credit history, a name on the Electoral Roll and a £35k job...

But also has credit cards and loan debts... gets made redundant six months later and is on the dole. Fine, but with LHA allowances going directly to the tenant rather than the landlord, what's he going to do if his credit card company gets nasty with the final demands? Do you trust that the rent will be paid?

TENANT B - is self-employed, foreign citizen so no chance of a name on the Electoral Roll, yet has enough money in the bank to pay rent for the next ten years. Work sporadic, averaging only £1k a month for the first six months of this year and have had to pay themselves out of their savings occasionally. However, they have a new contract and quadrupled income.

Ask my private landlord. Never not paid, never been late, never will be.

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We rented when we returned to the UK last year. Both letting agents charged us for credit checks. Neither check gave any data as "we had been abroad" and they couldn't (the rating agency) check "abroad".

The second of the two letting agents insisted that they only let to fully vetted people and wanted employer references (which we gave them) but their credit check agency also failed to provide anything.

It is a con - pure and simple - just another way to make money for the letting agent.

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Thanks for the comments. I guess my issue is not so much the need to do the checks in the first place, but who pays.

If I was a landlord in a 'soft' market and a prospective tenant was interested in renting my property, I think I'd move heaven and earth to get them in there, after making the requisite checks that I wouldn't think twice about paying for.

It annoys me even more when the landlord appoints an agent and still expects the tenant to pay the agency's costs - I know we're only talking a few quid, but it's the principal. It'd be like me asking the landlord to pay my moving costs (actually, that gives me an idea).

It seems to me that perhaps with the exception of the very low end of the market, the landlord has far more to lose than a potential tenant in this situation.

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And another question. You have two tenants for the same property:

TENANT A - has a flawless credit history, a name on the Electoral Roll and a £35k job...

But also has credit cards and loan debts... gets made redundant six months later and is on the dole. Fine, but with LHA allowances going directly to the tenant rather than the landlord, what's he going to do if his credit card company gets nasty with the final demands? Do you trust that the rent will be paid?

TENANT B - is self-employed, foreign citizen so no chance of a name on the Electoral Roll, yet has enough money in the bank to pay rent for the next ten years. Work sporadic, averaging only £1k a month for the first six months of this year and have had to pay themselves out of their savings occasionally. However, they have a new contract and quadrupled income.

Ask my private landlord. Never not paid, never been late, never will be.

Apart for the foriegn national bit, the latter is me.

You won't believe how hard it is to get agents to take you seriously as prospective tenants

tim

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... - I know we're only talking a few quid, ...

Eh????

The thieving scum charged us £125.

They wanted copies of bank accounts too. My deposit account would have bought the flat outright with change, quite a bit of change. We never bothered to give them details of our non-sterling savings.

The woman that photocopied them said we could buy and I said the prices will fall another 30% - her face said everything you need to know. That was a while back and I was wrong.

Please note I was wrong (you will not often hear me say that)

Prices will drop far more than that ;)

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You must make the landlord pay for the costs that an agency puts on tenants.

I've successfully made the landlord cover a renewal fee. Next time I rent a new place I'm going to add up all the letting agency fees and offer to pay less on the rent to cover my costs.

Oh, and by the way, why don't us renters take out credit checks on the landlord? And then charge them? In business, I've always done a credit check on my suppliers. Not just my customers. It's a real pain in the neck when a supplier you're relying on goes tit5up.

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Ged, yes I have a question for you. You state the importance of being on the electoral roll as a way of verifying that you live at the address that you have stated. What about non-UK nationals? I assume you deal with Australians, Kiwis, South Africans etc. who are over here for 2-3 years and in good jobs. Are they automatically turned down? I'm a US citizen and renting from a private landlord. Does this mean I have no chance of finding anywhere in future through a letting agency?

Hi,

Sorry for not replying sooner, but my wife decided that it would be a good idea to go into the office today and got me to do some work!

The company we use offers international referencing, so I know that it wouldn't be a problem to get a non-UK national through the process. Being on the electoral register is only one way of verifying that you are who you say you are and that you live at that particular address, but there are other ways of confirming that too.

Once you've been in the UK for a while - I think it's over six months - then the process of referencing you becomes as easy as referencing a UK national as you will have created a credit profile over here.

Having said all that, I can tell you that I've just referenced a Portugese couple who have been in the UK for less than 4 months. I've previously referenced countless Poles, South Africans, a couple from Iceland, people from India and Pakistan, so I can tell you that it is possible.

Hope this helps,

Ged

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And another question. You have two tenants for the same property:

TENANT A - has a flawless credit history, a name on the Electoral Roll and a £35k job...

But also has credit cards and loan debts... gets made redundant six months later and is on the dole. Fine, but with LHA allowances going directly to the tenant rather than the landlord, what's he going to do if his credit card company gets nasty with the final demands? Do you trust that the rent will be paid?

TENANT B - is self-employed, foreign citizen so no chance of a name on the Electoral Roll, yet has enough money in the bank to pay rent for the next ten years. Work sporadic, averaging only £1k a month for the first six months of this year and have had to pay themselves out of their savings occasionally. However, they have a new contract and quadrupled income.

Ask my private landlord. Never not paid, never been late, never will be.

Good grief, is someone paying me to answer all these? :lol:

This is my personal take on these two imaginary tenants and other letting agents will have different views, so don't start shouting at me - OK?

TENANT A - the short answer is yes, I do trust that the rent will be paid. Either the tenant will pay it or the insurance we take out against the tenant defaulting will pay. The long answer is - a referencing check is sort of like an MOT on a car - it's really only valid at the time you take it out. So, the tenant could be perfect in every way during the process and then lose their job - stuff happens. As a tenant, they should let us or the landlord know what's happening, so that as problems can be managed. I haven't come across a situation like you're describing, so I really can't tell you what I'd do in that situation.

As an aside, a lot of letting agents are becoming more reluctant to deal with people on LHA because it does go straight to the tenant and they're wary of what the tenant will do when they get hold of that money. From a business point of view, I'm more than happy to deal with people in receipt of benefits and can put them through the referencing process and ultimately take out insurance against default. You can't take out the insurance unless the prospective tenant is referenced, by the way. From a slightly more personal point of view, I realise that due to the current climate, a lot more people are having to claims benefits - they're not all spongers and lay-abouts, so we'll work with them to find them a landlord who will accept them. I see that as being part of my job really, convincing landlords who might otherwise not accept tenants on benefits.

OK, so TENANT B - you have to show that you have an income of about 2.5 times the monthly rent - that doesn't always mean that you get paid that, as you can take into account other means of income (savings, pensions, etc), so strictly speaking, in the situation you've described, the tenant would pass referencing. However, if the landlord or agent is at all twitchy, then the tenant could offer to pay an amount of rent in advance. Look, it's about minimising risk to the landlord, so if you paid six months rent in advance, then you've absolutely minimised any risk for the first six months, haven't you? After that period, the landlord/letting agent will see that they have a history with you and should be able to extend your tenancy under more normal terms.

The implied question is which one get the property...well, that's easy...the one who shows me how keen they are by completing the eight page application form first!

Oh and I forgot to mention earlier - I had to do a company referencing check on The Walt Disney Corporation a year or two ago when they rented out a property I was looking after - it was easier from them to rent a large property for several US based members of staff who were over here on a relatively short-term project rather than booking them hotel rooms on a week by week basis. Some of the figures that came up on that form were so huge as to be almost unbelievable and we were only looking at the UK arm of the corporation too! Actually, that might also be a solution to your TENANT B too - get the company to apply for the tenancy and go through referencing?

Hope this helps,

Ged

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Eh????

The thieving scum charged us £125.

They wanted copies of bank accounts too. My deposit account would have bought the flat outright with change, quite a bit of change. We never bothered to give them details of our non-sterling savings.

The woman that photocopied them said we could buy and I said the prices will fall another 30% - her face said everything you need to know. That was a while back and I was wrong.

Please note I was wrong (you will not often hear me say that)

Prices will drop far more than that ;)

How much do you think it costs letting agents to reference tenants? £125 for two is actually not much more than the actual cost to the agent, so you got a pretty good deal there.

And so what if prices drop? If you're selling, as long as the property you're buying also drops by the same amount, then you're not in any worse a situation, are you?

The situation isn't as bad as some peolpe would have you beleive, but as that argument is outside the scope of "Tenant Credit Checks" then perhaps we shouldn't go there.

Regards,

Ged

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You must make the landlord pay for the costs that an agency puts on tenants.

I've successfully made the landlord cover a renewal fee. Next time I rent a new place I'm going to add up all the letting agency fees and offer to pay less on the rent to cover my costs.

Oh, and by the way, why don't us renters take out credit checks on the landlord? And then charge them? In business, I've always done a credit check on my suppliers. Not just my customers. It's a real pain in the neck when a supplier you're relying on goes tit5up.

Why would any landlord agree to paying for you to be referenced? It's not going to happen.

We don't charge a renewal fee - not to the tenants and not to the landlords.

Now if I were a landlord and you came up to me with a list of things you'd been charged for and said "Right mate, I'll have your property if you knock of this amount..." then my answer would be "Thanks, but no thanks. I'll just wait for the next tenant to come along who won't give me any grief!" so what happens to you? Well, you've already paid those charges, so you'll lose them. You'll lose the house and when the next property comes along, you'll have to pay them all over again.

Unless the property has been on the market for a long time, unless you're the only people who've shown any interest and unless the landlord is desperate, you are on a hiding to nothing. It'll probably make you feel better, but it won't work.

Regards,

Ged

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You can negotiate down the price to 20 quid per head. If you have payslips or some type of employment contract, that will often suffice.

When we rented, we refused to pay for a credit check and offered to show payslips instead. That worked for our LL.

The reason I refused a credit check was that the EA was asking for loads of information - if the data got into the wrong hands, it could easily lead to identity theft. Now, I will be willing to give details to a bank or major credit card company, where presumably they have reasonable data security, but giving to an EA and their related credit-check agencies (names I have never heard of), is a joke!

Negotiate down to £20 a head? It costs me more than that to do the credit check/referencing!

Oh and you might be surprised to know that estate agents - why are you renting through an estate agent, by the way, don't you know that they're the scum of the Earth? :rolleyes: - and letting agents - who are nothing but kindness and beauty personified :lol: - have to abide by exactly the same data protection rules as anyone else? You're happy to give your information to a non-UK based establishment that, legally, doesn't have to abide by the UKs data protection laws, but you are reluctant to give that same information to a company that is UK-based and does comply?

Regards,

Ged

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How much do you think it costs letting agents to reference tenants? £125 for two is actually not much more than the actual cost to the agent, so you got a pretty good deal there.

I got a good deal? Are you retarded or something? I got a good deal by paying 125 quid to tell my letting agent absolutely nothing and to add no value to the transaction? Mate I have run my own business for 20 years and understand the point of risk assessment, you clearly don't.

And so what if prices drop? If you're selling, as long as the property you're buying also drops by the same amount, then you're not in any worse a situation, are you?

....

I am not buying anything. And yes you are - your inability to understand asset price dynamics confirms that the answer to my second question in paragraph 1 was yes.

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The company we use checks the electoral roll to see that you're on it at the address you've given, checks to see if you have any adverse credit, checks your employment status - do you work where you said you work, do you earn what you've said you earn, is the position temporary or permanent, etc.

How do these Reference Agencies come about confidential data like salary figures?

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I got a good deal? Are you retarded or something? I got a good deal by paying 125 quid to tell my letting agent absolutely nothing and to add no value to the transaction? Mate I have run my own business for 20 years and understand the point of risk assessment, you clearly don't.

I am not buying anything. And yes you are - your inability to understand asset price dynamics confirms that the answer to my second question in paragraph 1 was yes.

Is this the part where we're supposed to start ranting and insulting each other then?

Just one thing from my side first though - I'm not your mate.

OK, off you go then...

Ged

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How do these Reference Agencies come about confidential data like salary figures?

Well, you - the applicant - gives me/them that information in the application form. You also consent to the referencing agents contacting your employer to confirm the information given.

Regards,

Ged

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Well, you - the applicant - gives me/them that information in the application form. You also consent to the referencing agents contacting your employer to confirm the information given.

Regards,

Ged

And employers are happy to provide such confidential data to any Tom, Dick or Harry who asks?

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And employers are happy to provide such confidential data to any Tom, Dick or Harry who asks?

Last reference check I had (just a few weeks ago), the ref company sent me a PDF template to print and sign to give to my employer consenting to them giving out this information. Otherwise HR obviously would not have given them any info.

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And employers are happy to provide such confidential data to any Tom, Dick or Harry who asks?

Er, yes, as their employee - you - has given permission for the referencing agency to approach your employers for the information.

Regards,

Ged

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Er, yes, as their employee - you - has given permission for the referencing agency to approach your employers for the information.

Regards,

Ged

The last time I had to go through credit checks for a rental I provided a figure for my income, and I also gave details of my employer. I did not at any time give permission to my employer to pass on my salary information to the credit reference agency. This is the reason I'm questioning the assertion that such a thing happens.

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The last time I had to go through credit checks for a rental I provided a figure for my income, and I also gave details of my employer. I did not at any time give permission to my employer to pass on my salary information to the credit reference agency. This is the reason I'm questioning the assertion that such a thing happens.

Which referencing agency did you go though? _All_ of the ones I've had dealings with over the years have a consent section that you as a tenant have to sign. I'd be very surprised if you hadn't given consent, whether you realised it or not.

Did you just think that referencing agencies simply accept what people put on their application forms? What would be the point in referencing anyone if that were true?

Regards,

Ged

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