Referencing

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    Referencing

    Hi all,

    Completely new landlord here, we have a 4 bed house which we have struggled to sell, so have decided to rent rooms out. We are moving out and it will be rented to 4 individuals. We have been in touch with the council and they've written back formally saying we don't need planning permission or a HMO license, however we have to abide by the HMO regulations, we've done alot of research covering all aspects of HMO letting including scrolling through this forum.

    I've looked at how to reference, however I'd like to know first hand from other landlords, how do you go about referencing? It's our only real concern left before we feel ready to jump into the deep end!

    Thank you

    Craig

    #2
    I don't mean to be rude, but you sound very green and I would not advise you to even consider letting the property until either you have appointed a good agent who will take care of everything for you, (not easy finding a good one) or done a crash course on landlording, perhaps by joining one of the landlord associations and looking at their training. If you wander into this blindly you could lose your shirt or worse, your liberty.

    Comment


      #3
      On what basis is the property owned. You state you have moved out , is the property subject to a residential mortgage, if yes have you obtained a Consent to Let , if not do so immediately or arrange a Buy to Let Mortgage ; also have you notified your insurance company that the property is vacant , usually there is a vacant occupancy no greater than 28 days before risk defaults to basic cover, but if Let the insurance has to be adjusted.
      Do not make any misleading statements , you will be found out and the consequences are not palatable so far as the actions that could be metered against you by the current lender and possibly the Insurance Co should any subsequent claim arise. If however your property is unencumbered then you only need to formalise matters with the InsCo

      Comment


        #4
        Good morning

        Thanks for your replies, I don't mean to sound rude, but DPT57 we will live very local to the property and have decided to manage it ourselves, as I've already, said, we have done extensive research into all aspects, I know how to reference, I just wanted first hand personal input from a landlord. We are not wandering around blindly in the slightest, your post isn't helpful in the slightest.

        Loanarranger thank you for your concern, we have already contacted the bank and insurance company with regards to our house changing to a BTL, my wife worked at the bank for 8 years and now works in insurance, so thankfully she is all over the legalities for us, however thank you for the information.

        Comment


          #5
          As you are letting the rooms yourself you decide what is the best background checks to make for the type of tenants you wish to have in your house. If you are taking out tenant rent insurance you will need to comply with their terms but the main area that I checked were:

          1. Employed - take employer reference
          2. Check bank statements over last 3 or 6 months
          3. Credit check for any defaults
          4. Take previous landlord reference- I found that you can get more information from a phone conversation

          In the end you not only have to decide if this applicant is suitable but also his/her fit within the house and other 3 tenants. For example introvert/extrovert, working/not working, tidy v messy, standard working hours v anti-social working, loud music v quiet, drug taker(marijuana use is seen as like opening a can of lager by some) v non partakers, plus other factors that experience will force you to include.


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            #6
            Best to use a tenant assessment company to do all the reference checking. I would not recommend accepting any references direct from a prospective tenant.
            Referencing companies charge a modest fee per tenant, and its well worth it. I can recommend one to you if you PM me.
            You will need to carry out a right to rent check too, yourself, on each tenant.

            Also, I find the council's comment, that you don't need a HMO license to let 4 rooms individually, not likely to be true.
            Any home where there are 3 or more people living in it from different households, is a HMO.
            https://www.gov.uk/house-in-multiple-occupation-licence

            Comment


              #7
              The HMO definition triggers a need to manage it in certain ways, including additional fire safety, but doesn't trigger a need for licence. Councils may have Additional Licensing, in which case you will need one for three or four people. However to absolutely require a licence, a house or converted flat requires at least 5 people. Rules of purpose built flats are different.

              Comment


                #8
                Hopefully your property is of a standard that the rooms can be let to tenants of a 'higher' standard as this tends to make overall cleanliness easier. I also have a 4 bed property rented out nearby as single rooms so I'll give a slight insight as to what I do.

                First of all I rent on spareroom with a specific age range to attract so called young professionals. They often look for a room even though they can afford more, whereas older folks looking for a room tends to be because thats all they can afford so gives a bit of financial headroom for rent. I ask a few questions, and if they seem like nice enough people that I think I would be ok living with, are in full time employment in reasonable jobs then I move them onto referencing. I try to watch out for those appearing to be singles who are actually after moving a partner in. Also with males I look out for recent split ups where there are children who may turn out to be more important than rent (facebook can be a great help, in fact I search for all applicants on facebook). Last thing I do is try to make sure the 4 people are culturally compliant. I've had problems in the past with buckets/scoops in the bathroom due to non-western toilet habits, and marijuana smoking where rules aren't really understood. If I'm happy then the next stage is referencing. I use an outside company mainly to see if the applicant is happy to be referenced and credit checked by an outside agency. Don't be under any illusions that they do a good job, they get it done as quickly as possible and actually are less thorough than you would be yourself in my view. You will understand this once you have tenants moving out and you are on the other end of such referencing as in being asked by the company.

                As well as HMO regulations there are 2 other major things to consider. Heating Bills are a major concern, you'll have to manage as you see fit, but always remember that a bit of gas central heating wasted is much better than portable electric heaters in each room(even if you ban them). I provide a generous amount of heating but limit the maximum temperature that can be set by using a landlord thermostat. Second thing is cleaning. The communal areas will not get cleaned by the individuals so need to be cleaned weekly. Be aware though that professional cleaners don't tend to step outside their agreed absolute requirements you have agreed so stuff can get missed. I have now started weekly cleaning myself as it means 'All' cleaning required gets done, but also it gives me good reason to visit and oversee the property weekly. One thing is certain, the room residents will forget to pass on defects that need to be sorted so good oversight is essential. (Weekly clean and check round only takes me 2-3 hours).

                Always remember it is better to turn down a tenant you don't think suitable and have a bit of a void than to have a non payer or messy creature on your hands.

                Pricing can be tricky, but I have found voids to be minimal at 'correct' pricing sometimes only a day or two between occupants, whereas setting the price just a little too high means no interest whatsoever. (Watch the higher price comparable rooms on Spareroom be up for months rather than letting quickly and you will see what I mean.) Of course this may be area specific to me, but I have a feeling it will hold pretty true allover, just the room values will be different.

                Comment


                  #9
                  I have been a landlord for over 10 years now, but previously have always relied on lettings agents to do the referencing, however, I have now decided to manage myself and incidentally, I'm booked on a LLAS Landlord Course for next week.

                  I have recently found suitable new tenants for my flat and would like to use a referencing company, so would appreciate any recommendations too.

                  Also, cupola, nothing to do with references or HMO, but just so you're aware that you may be liable to Capital Gains Tax when you do come to sell the property if it is still classed as your main residence, so you may want to considered changing your main residence if possible - see:
                  https://www.gov.uk/tax-sell-home/nominating-a-home

                  Comment


                    #10
                    Originally posted by Cupola View Post
                    ............Thanks for your replies, I don't mean to sound rude, but DPT57 we will live very local to the property and have decided to manage it ourselves, as I've already, said, we have done extensive research into all aspects, I know how to reference, I just wanted first hand personal input from a landlord. We are not wandering around blindly in the slightest, your post isn't helpful in the slightest.

                    Loanarranger thank you for your concern, we have already contacted the bank and insurance company with regards to our house changing to a BTL, my wife worked at the bank for 8 years and now works in insurance, so thankfully she is all over the legalities for us, however thank you for the information.
                    Aye, very good.

                    Seriously start with this...

                    https://forums.moneysavingexpert.com....php?t=5180214

                    And do intro course from NLA or RLA
                    & read a couple of books on the subject.

                    When I started I thought I knew what I was doing: Made expensive, painful, long-running, legally crippling mistakes: So I resolved to start learning. Still learning: Still making mistakes (19+ years on...)

                    Good luck: Most years I make money from renting: But not always.

                    sincerely hope you have the financial & emotional reserves to cope with the tenant-from-h*ll (or agent-from-h*ll...) who doesn't pay for 7+ months whilst you pay mortgage & legal etc fees to evict & repair bills: Repair bills? Oh yes, or judge will give them more time before they have to go... And this & other landlord-related forums show "guaranteed rent" schemes/scams frequently don't pay out...

                    Over ALL the legalities eh? There are more than 100 Acts & regulations affecting renting. No offence but £5 says your esteemed wife isn't 100% on all of them... I know I'm not ....

                    Shame the tax regime is so much more painful now than when I started...
                    I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

                    Comment


                      #11
                      I, like you, Cupola live very close to one of my properties. It is my best performing one. I have been very lucky with all the tenants over the 13 years. I have had the property run by a lettings agent (not well) and I have had the letting agent source me and check tenants which I have found to be the best. They charge me one month's rent to find,check and sign up the tenant (I stipulate the most suitable based on the others already there) and then I take on the renewals which is not very onerous.

                      The key to it I think is constant monitoring, jump on anything whether it is routine maintenance or whether it is bad behaviour/damage. With all the checks done successfully you can still get bad tenants who at the end of the tenancy change from their good behaviour. This seems to be worse with the 'itinerant' types who live in HMOs. The longer the time the tenants stay the better has been my experience so if they are these so called 'professional' types, make sure that they are not on some short-term contract work.

                      Of course you may have to take what you get due to financial pressures.

                      A pessimistic point: if Jeremy wins the next election and brings in the 'Right-to-Buy in the PL market then we shall all be in the same boat trying to sell or ending tenancies. It is a risky business!!

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