UK Landlord Guide on How to Choose Good Tenants

Choosing good tenants is probably the most important thing for a buy to let or HMO landlord to do. Whether landlords outsource the tenant-find to letting agents, or find tenants themselves using online agents like OpenRent, the principles remain the same.

It’s not always easy finding good tenants. Many applicants appear charming and convincing when they view the property. However, their smiles hide an undisclosed history of rent arrears and CCJs, which only a thorough tenant reference will uncover. I speak from experience here.

In this blog post, I share practical tips to help landlords choose good renters fairly and efficiently. In writing the post, I draw on my experience as both a lawyer and choosing tenants myself as a self-managing and self-letting landlord.

_{Note: Since becoming a happy customer of OpenRent in 2022, I’m now one of their affiliates. This means if you buy anything after clicking on any of the OpenRent links in this blog post, I will receive a small commission. This commission will support the running costs of this free blog for the property community.}

What does a “Good Tenant” actually meant?

These three fundamental qualities are shared by good renters:

1. Good tenants pay the rent on time and in full

This is of fundamental importance to me. Good tenants honour their side of the tenancy agreement, which includes paying the rent in full and on time. I hold up my end of the bargain by providing well-maintained properties for them to live in, and I expect renters to keep up with the rent.

Although I’m a responsible landlord and care about the wellbeing of the people live in my buy to lets, it is ultimately a business. I don’t want the hassle of having to chase rent, or having to take them to court for rent arrears. Also, I want to avoid being in the situation of having to evict tenants because of rent arrears.

Prevention is better than cure on this front, and for me that means avoiding renters with a history of rent arrears.

That said, I do understand that some people fell into arrears during Covid through no fault of their own. If this is the case, I’d want them to be upfront about it with me, before I take up references. They’d need to talk me through the details, including any extenuating circumstances. I would be reasonable about this. However, if they don’t disclose rent arrears and then they appear on the landlord reference, it’s an automatic no from me.

2. Good renters look after the property properly

It’s important that renters look after the property properly. This means that they should keep the inside and outside of the property clean, maintain the garden and dispose of rubbish properly. They also need to do basic maintenance tasks like clearing out hair from shower traps.

These obligations are in tenancy agreements and are also implied by case law – see Warren v Kean (1953).

Part of this is also letting the landlord know when something needs repairing, such as a broken down pipe, or a hazardous situation (click here for explanation of HHSRS Hazards).

A way of judging whether renters will look after the property properly is through a landlord reference. However, there may be good reasons for ignoring an unfavourable landlord reference. For instance if the tenant can show the landlord ignored repeated requests for maintenance and that they paid the rent in full and on time.

>> Related Post: Which repairs and maintenance are the tenant’s responsibility?

3. Good tenants are good neighbours

I wouldn’t let to anyone if I had good grounds to believe they wouldn’t be good neighbours, as being a good neighbour is part of being a good tenant. Being a good neighbour also includes being a good person to live alongside, in (say) an HMO.

What do I mean by a good neighbour? It’s someone who treats their neighbours with respect, and does not carry out anti-social behaviour. This includes excessive noise, abusive behaviour, shouting, swearing or fighting, vandalism.

Choosing tenants that are likely to be good neighbours is also part of being a responsible landlord. Neighbours are important.

When I complete on a property purchase, one of the first things I do is introduce myself to the neighbours. I explain that I’ll do my best to find tenants that are good neighbours. I then give them my number and ask them to let me know if they’re ever concerned about the property or the renters.

Having a good relationship with the neighbours means I’m more likely to be able to nip in the bud any potential problems with anti-social tenants.

Which factors must landlords not take into account when choosing tenants?

Landlords don’t have complete freedom to choose or reject whoever they like. It’s subject to the same rules as in other walks of life, particularly relating to discrimination.

For instance, it’s illegal for landlords to discriminate against applicants because of their nationality (assuming they have the right to rent), race or religion. Likewise, landlords are not allowed to turn down applicants because of their marital status, sexual orientation or gender identity.

Do not base your selection on these discriminatory criteria. Not only will they have no bearing over whether the person will be a good tenant, but it’s illegal.

Why is it so important to find good renters for buy to lets?

Good renters should be cherished. If a renter pays the rent on time, looks after the property well and is a good neighbour, being a buy to let landlord is easy. A pleasure even. All the landlord needs to do is to keep the property in good repair, pay the mortgage, and it’s a successful buy to let investment. Near passive income.

Problematic tenants, on the other hand, can make the lives of their landlords, letting agents, and neighbours a misery. Due to delays in the court system, it can also be time-consuming to evict bad tenants, even with Section 21, and recover rent arrears.

Prevention is better than cure, which is why it’s so important for landlords to find good renters for their buy to lets.

How can self-letting landlords screen applicants?

With the current high demand for rental properties, if you’re looking to use OpenRent, or any other service, be prepared for a large number of applicants, many of whom may be totally unsuitable.

It’s important not to waste time on unsuitable applicants, by obtaining the key information you need to weed out people who don’t meet your criteria.

If you use OpenRent, I recommend switching on the default screening option. This means that all viewing requests will come with the proposed move in date, minimum tenancy, combined monthly income, whether they have a pet etc etc.

I also set up “Tenant Auto-Reply”, which is a message that automatically goes to each applicant when they request a viewing. These are the questions I set up in Tenant Auto-Reply in my last tenant search with OpenRent in July/August 2023:

• How many adults would be living in the property, and please let me have the ages of the children.
• What is the relationship between the adults (eg a couple, family members (sister, parent), friends)?
• What is your occupation and the occupation of any adults who would be living there?
• How long would you plan to live in this property?
• What is your connection to [town]?
• Where abouts are you living now and why are you looking to move?
• What is the breed and age of your pet (if applicable)?
• Have you ever had any CCJs and if so, please provide details.
• Is the property for yourself? If not, explain why you are asking to view for someone else. Please do not apply if you are a rent to renter or another intermediary.

I added the last question after having people pretending to be interested in the property, but turning out to be rent-to-renters or agencies. There’s an option to report these people who pose as genuine renters, which I duly did.

>> Related Post: What is Rent to Rent?

My detailed list of questions was also invaluable in weeding out sharers who would turn it into an HMO. Although my properties aren’t in areas with with additional licensing for small HMOs (over 4 sharers from at least 2 different households), I prefer single lets with one household, rather than a small HMO.

>> Related Post: What exactly is an HMO?

As I’m looking for long term renters, I prefer locals or people with good reasons for living there, as they’re more likely to stay.

You can change the questions at any time. I highly recommend this as an efficient way of obtaining information to see if it’s worth your time showing them the property.

>> Related Post: Landlord Guide to using OpenRent to find tenants

How can landlords check if applicants are likely to be good tenants?

Thorough referencing is fundamental to finding good tenants, whether you let yourself, or delegate it to a letting agent. This is not something to cut back on.

Here are the ways you can check to see if your applicants are being truthful when they assure you of their perfect track record and high salary.

1. Credit checks – OpenRent example

A credit check is a “must do” for all applicants. It’s quick to do, and the reference companies will check with a credit referencing agency. OpenRent use Equifax for both its one day Speedy Reference, and the Comprehensive Reference. These both cost £20 per applicant.

Here are the credit checks that form part of the OpenRent referencing:

• Credit score from a credit referencing agency. This is a statistical measure of the likelihood of the applicant paying their rent on time.
• Fraud Check – this uses linked address, identity & fraud information searches.
• Outstanding debt search – this search reveals if the applicant has had any unpaid debts registered at the Country Court with a County Court Judgment (CCJ). It also provides other court information registered (eg bankruptcies, IVAs) over the last six years in the applicant’s name.

2. Affordability / Income verification

Applicants might be the loveliest people, who will keep the property in immaculate condition and be great neighbours. But if they can’t afford the rent, it’s not going to end well.

Tenants should earn at least 2.5 x the rent, preferably more, to allow for them to cope with inflation and hopefully save some money. Being in regular, stable employment is helpful.

Zero-hours contracts and people on temporary contracts or in their probationary period are more problematic. However, if they can show through bank statements that they’ve had a regular income, have never been in arrears previously, and have a good credit score, it might be possible to be lenient.

OpenRent ask for bank statements and payslips on the Speedy Reference. For their Comprehensive Reference, they will contact the applicant’s employer to obtain details of their employment, including salary, occupation and length of employment.

It can also be complicated if the applicant is a self-employed sole trader, with income coming from multiple jobs. OpenRent will use accountant details or previous bank statements to assess suitability For some types of self-employment (eg builders), you will need to look at the profit after expenses to ensure they clear 2.5 x the rent before tax.

If someone has recently moved jobs, you could ask to see their employment contract. Does it have a probationary period? What’s the notice period?

3. Landlord reference

If the applicants have previously rented, the landlord reference is key. They can confirm whether the applicants have ever been in arrears, have looked after the property and whether they’d recommend them.

If a reference is a little vague or non-committal, I try to speak to the landlord. Sometimes a pause can be very revealing.

Do also bear in mind that sometimes landlords just want to get rid of problematic tenants, and might not tell the whole truth…

4. Search on Google and Social Media

Social media and google can be so useful at finding if their social media profiles tally with what your applicants say about themselves.

LinkedIn is valuable for showing if they change jobs regularly, or if there are unexplained gaps in employment. On the plus side, it can show steady promotions within the same company. Any posts can give an insight into them as a person.

Facebook and Instagram can give an idea about their priorities and life choices. Google can be a treasure trove revealing failed businesses, complaints and also newspaper reports.

What if a landlord uses a letting agent to find tenants?

The ultimate decision over the choice of tenant sits with the landlord. As it’s such an important decision, I urge landlords to be actively involved in the decision, and not just leave it to the letting agent.

Letting agents usually present the landlord with a short list of candidates who have expressed interest in letting the property, with details of their income and general situation, and then make a recommendation. The landlord will choose which one should go forward to referencing, and the tenants will pay a holding deposit of one week’s rent.

When I used letting agents, I would make the initial decision as to who should proceed to referencing, after being presented with the options. Next, assuming the references were fine, I’d meet the chosen applicants before the tenancy agreement was signed.

This gave me the opportunity to say no, if I didn’t think they were right for the property. It also meant I got to meet them before the tenancy started, which was useful for me as a self-managing landlord.

I do think it’s worth asking the agents for detail on the results of the referencing, particularly the landlord’s reference.

Landlords can also do a social media check, to verify that it all tallies.

Conclusion

Choosing the right tenants is such a crucial decision, whether you outsource it to letting agents, or do it yourself.

It can be tempting to take the first applicant who wants to proceed. According to Rightmove, as of June 2023, it was taking an average of 17 days to find a tenant. Tenant demand is 42% higher than June 2019.

It’s worth taking your time to find the right tenant. Be patient. Sometimes it takes a few days for good quality candidates to appear.

Don’t be tempted to proceed without referencing. It’s so cheap with companies such as OpenRent, that it’s a false economy not to do it.

You can also get rent guarantee insurance if a tenant passes referencing, for the ultimate peace of mind. I suspect that’s something that will become more popular once Section 21 is abolished, and landlords will need to use the revised Section 8.

Finally, having a website with your policies and a list of FAQs is a good way of making clear your expectations from the start. I provide a link to the FAQs on own website, Suzanne Smith Properties, before signing a tenancy agreement.

>> Related Post: How to create an effective website for your property business