Landlords and letting agents are not conducting sufficient financial checks on new applicants, according to new research.
A new industry report commissioned by insurance agency Landlord Secure found that 75 per cent of applicants were not asked to provide proof of income before signing a lease agreement last year. It was also uncovered that a mere 22 per cent of applicants were told that it was necessary to provide proof of sufficient funds in accounts linked to their rent.
Shockingly, just 35 per cent were told to provide evidence that they had an active bank account at all, whilst only 25 per cent were told to provide proof of ID.
The findings suggest a worryingly unstable rental market in the UK, with landlords forced to deal with tenants signing leases that they are potentially unable to afford. This is compounded by the fact that 59 per cent of landlords believe that their applicants undergo robust financial tests.
Landlord Secure’s report comes as the Residential Landlords Association has called for a tenant’s rent payment history to be included as part of the credit check process.
Managing director of Landlord Secure, Steve Burrows, said: ‘There is a misconception among landlords who rely on letting agents to carry out financial checks on tenants that the information they are getting gives an accurate and up-to-date reflection of a new tenant’s financial background.
‘The reality, however, is that agents rely far too heavily on information that is publicly available, like if an applicant has been subject to a county court judgement or been declared bankrupt. But this will not provide an accurate picture of an applicant’s current financial situation and more robust credit checks need to be made to give landlords the data they need to make informed decisions. It is more surprising and worrying however to find that some applicants are not even being asked to show proof of ID or income as this should be standard information on every application for a rental property.’