Business | Property
Landlords get more picky about tenants
Landlords with expensive properties in central London are being more discriminating about who they will accept as tenants as they become concerned about the threat of rent defaults and periods of vacancy.
- By Sharlene Goff, Financial Times
- Published: 23:04 July 4, 2009
London: Landlords with expensive properties in central London are being more discriminating about who they will accept as tenants as they become concerned about the threat of rent defaults and periods of vacancy.
Letting agents are putting prospective tenants through rigorous credit checks as property owners want to see proof of income, including bonuses, as well as highly personal information such as the value of investment and share portfolios and savings accounts.
Knight Frank, the agent, said it had reviewed its reference process for new tenants to make sure it could provide enough data for landlords. Rather than using traditional credit checking agencies it is now conducting manual checks itself.
In some cases it is having to procure an indication of the tenants' net wealth from their banks as well as guarantees from their employers that their jobs are permanent and not under threat, and details of their anticipated bonuses.
"This is a pretty radical change," said David Mumby, who runs Knight Frank's Chelsea office.
"We are doing much more thorough checks as putting tenants through a reference company is simply not enough any more."
He said the most exhaustive checks were being done at the higher end of the market, on luxury flats or family houses in desirable boroughs such as Chelsea that would let for at least £1,000 (Dh6,130) a week. While tenant defaults had not yet become a big problem the "fear factor" had intensified in recent months as redundancies gathered pace, particularly in the City.
New figures from the The Association of Residential Lettings Agents show that 65 per cent of members have seen a rise in the number of tenants struggling to meet rental payments in the past six months. Meanwhile, 93 per cent of Arla members - and an even higher proportion in central London - said more tenants had been haggling over rents.
However, some agents said landlords were starting to take a harder line on rents, with some refusing to negotiate such large discounts.
Landlords who are concerned that tenants may default or try to renegotiate rents a few months into their agreements are requesting quarterly or six-monthly rent payments in advance, rather than regular monthly instalments.
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