Avoid tenant issues: how landlords can spot and avoid troublesome tenants

Buy-to-let specialist David Lawrenson gives us some advice on how to spot a troublesome tenant.

Even for the most seasoned landlords out there, buy-to-let can be a tricky business.

We spoke to David Lawrenson of lettingfocus.com about what you need to do to avoid problematic tenants.

This article is part of a wider series on investing, covering all areas from stocks and shares to buy-to-let, peer-to-peer and alternative investments. Click here to view the full guide.

Do thorough checks

This is the single most important thing to consider.  

Your first check is the person’s income – they should ideally be earning a minimum of two-and-a-quarter time’s the rental and are in a financially solvent position. Don’t forget to do a credit check for a better overall picture.

Ask for the last three months in bank statements (six months if they’re self-employed). This will give you a clearer idea of their outgoings and whether or not they’d be able to meet their rent payments. A massive bank balance won’t go far if they’re overdrawn!

They’ll also need to provide a proof of ID like a passport or drivers licence and a reference from their previous landlord if possible.

Don’t take things any further with a prospective tenant if there you sense anything suspicious or they’re not who they say they are. “Bad tenants cost landlords so much money,” advises Lawrenson.

Give your letting agent clear instructions

Those finding a tenant through a letting agency should let them know exactly the type of tenant you want and establish what checks they’re going to carry out.

It’ll vary depending on what kind of property you’re letting. Individual rooms with a lower rent would be lower risk and the checks needn't be as stringent, for example.

Or ditch them if you have to

If your letting agent hasn’t found a suitable tenant within four weeks, sack them.

It’ll be cheaper to do it yourself, anyway. Just make sure you’re up to speed with legal requirements and the admin involved.

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Look for references

A previous landlord is best but employment references are fine too. In fact, some landlords only use employment references.

Even if you’ve got a prospective tenant who doesn’t have a previous landlord – maybe they have had a stint living with their parents – ask for a reference from the last landlord they had.

The same checks apply to guarantors

You’ll be relying on guarantors for an income so most of the same checks apply. Do a credit check, look at previous bank statements and get a solid proof of ID.

The only stipulation Lawrenson makes it that the guarantor has to be a homeowner.

Ask the right questions at the right time

When you speak to a prospective tenant on the phone, ask:

• Who is the property for?
• Where are you living now?
• What is your current landlord like?

Your follow-up email can go one of two ways. If you think they’re a dud, thank them for their time and move on or if you’re happy, arrange a viewing time.

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Use social media wisely

You’ll find lots of horror stories of landlords weeding out potential tenants based on their social media profiles.

Lawrenson argues that it’s best to discount social media, particularly older posts. “People change,” he says.

Just use it to verify their job title and email address and phone number, if they’re listed.

“You could do a basic Google search but the existing checks are robust,” says Lawrenson.

Don't make snap judgments  

Try not to be swayed by first impressions. If someone shows up to a viewing looking tatty, don’t rule them out.

“Never make judgments - as long as they can look after the property, they're fine” said Lawrenson.

However, he’s harsher on people who turn up late to viewings without informing him – he says it makes them seem disinterested.

Go with your gut

You don’t even have to explain your decision for accepting one tenant over another. It can simply be enough to go with a tenant that you’re happy with who can safely afford the rent.

“Sometimes you just know,” says Lawrenson.

And if you’ve already found a dodgy tenant who won’t go – take action

Even with the most thorough checks, a few troublesome tenants will still seep through. 

It might take some time for it to become apparent. Something can happen unexpectedly - but if it does, take action.

Lawrenson says:

"If they won't go, get a court order and a bailiff involved".

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