With homelessness levels soaring across the UK, the need for an increased affordable housing supply is reaching crisis point. More and more investors are exploring innovative ways of working with the public and third sectors in order to meet this demand but how do you screen your clients in this market?
One crucial area to get right – and one of the most common tasks I am asked to assist landlords and property investors with – is the sourcing, screening and selecting of welfare tenants.
When I first started procuring privately rented homes for Manchester’s homeless, news travelled fast – and I was soon inundated with enquiries for the rooms I had made available to me.
Social Property With Amy Varle
- Part 1: Rob Introduces Amy Varle From Social Property Investment
- Part 2: What Is The Difference Between Affordable Housing and Social Housing?
- Part 3: What Is The ‘Housing First’ Homelessness Strategy?
- Part 4: A Landlord’s Guide To Tenant Referencing (In Social Property)
- Part 5: An Introduction To Collaborative Working With The Third Sector
- Part 6: What Are The Highs And Lows Of Working In Social Property Investment?
- Part 7: Where Is The Best Place To Invest In Social Property?
- Part 8: How To Find The Perfect Social Tenant For Your Multi-Let
- Part 9: Universal Credit & What It Means For Landlords and Investors
- Part 10: What Will The Homelessness Reduction Bill Mean For Landlords?
- Part 11: What Is Social Value and What Does It Mean For Property Investors?
The Tenant Referencing Process
It should go without saying that utilising traditional tenant referencing methods (those adopted by the majority of high-street letting agencies) is not the best ways to accurately reference and check prospective tenants who are in receipt of welfare assistance.
I didn’t need to conduct a pilot scheme to tell me that the people I wanted to house would likely be unable to provide an employer reference or pass a computerised credit check – and so I had to be extremely creative when assessing applicants for our homeless housing projects.
Thinking Outside the Box
When I started out, I obviously had to give a little bit more security than just my word. Whilst I took the time to get to know the people I was supporting and had a good sense of ‘gut instinct’, I couldn’t expect professional investors to just take a chance on a tenant, however much belief I had in them!
I had to obtain – and then disclose – as much information as practically and legally possible, in order to allow my clients to make an informed decision.
Try Different Methods
Through much trial and error, over the course of the pilot scheme research project, I devised my
own screening methods which continue to adapt and evolve as they are implemented by others
today.
Some of the simple ways I advise property providers can gather information about an applicant are as follows:
- Assessing Eligibility for Benefits
- The Application Form
- Documentation
- From Supporting Agencies
- Social Media
- The Tenant Reference Letter
- A Guarantor
1. Assessing Eligibility for Benefits
It is possible to complete a simple online assessment in order to ascertain an individual’s benefit entitlement before you commit to even a viewing. Visit www.entitledto.co.uk to get a comprehensive view of your applicant’s circumstances.
Remember that the questionnaire will form part of your tenant referencing procedures and so it is important to listen carefully, making a note of answers as necessary.
This is an opportunity to chat with a prospective tenant in a casual manner and should give a more comprehensive overview of the individual; historical information, their present
situation and ultimately, whether they will likely meet their tenancy responsibilities.
2. The Application Form
Be as specific as possible with questions in your own application form or pack, taking particular care with sections such as address and employment history.
Ask why circumstances changed, why previous housing hasn’t been maintained or why your tenant
is between jobs.
Let the applicant know that the answers they give will assist you in supporting them and ensuring that the accommodation fully meets their needs.
Ask them to be honest and assure them that the information will be treated in the strictest of
confidence.
Make sure you adhere to data protection and confidentiality law and signpost an applicant to a supporting agency if you feel they need extra help.
3. Documentation
I ask the applicant to bring along all of their documentation and paperwork to the viewing so that I can assist them in sorting through their evidence and ensure they have everything required.
Make sure you have your tenant’s written consent to store any personal information and that you
adhere to data protection and confidentiality laws.
Be sensitive in terms of documents and information you possess and always keep in mind that you may be working with a vulnerable person.
Take a copy of everything relevant, as you would with a normal tenancy sign-up.
4. From Supporting Agencies
Part of the screening process should include enquiring as to the other agencies involved with the tenant and their general support network. This may include conversing with a social worker, support worker, charitable organisation or a healthcare professional.
Most agencies will be pleased that you are taking a proactive approach to meeting the needs of one of their service users and so will be happy to assist you with information, so long as the tenant gives their consent.
Many organisations have a referral process in place already and so can greatly assist you with your own due diligence – if you are considering housing a tenant connected to an external organisation, ask them if they can email you a service user profile or referral letter.
It’s even better if you can form a relationship and work together.
5. Social Media
One of the best ways to find out about a tenant applicant today is to look them up on social media.
Most people have some form of online footprint nowadays and I’m sure for many property
providers, an applicant’s trail can seal their fate!
In truth, I have rejected applicants on the basis of their social media history; if their page is filled with pictures of partying, I know, for example, they won’t fit in with quieter housemates.
6. The Tenant Reference Letter
I ask for a professional reference and character reference; basically, anything an applicant can get their hands on.
Whether a tenant produces a document from their former housemate, college tutor or next-door neighbour, any information received will help to build up a picture of what this person is like.
Once, a would-be tenant brought the landlord and I a detailed letter of support from almost every person that lived on the street of his elderly mother. He didn’t have any professional references but was a helpful member of the community who had touched a lot of people over the years.
We gave him a chance and he ended up being an excellent tenant, who was later employed by the landlord himself.
7. A Guarantor
Getting a guarantor is a good way of further mitigating risk when housing social tenants, although it is one which isn’t always available.
I don’t like to exclude tenants on the basis they don’t have someone who can legally commit to financially rescuing them if things go wrong – how many people really do these days?
Some of the very best tenants I have worked with have been victims of domestic violence and would have therefore found it near impossible to provide a guarantor.
By implementing a strategic and systemized way of working you can provide your own level of
‘guarantee’ in the form of the way your agreement is designed and structured.
Thanks for reading!
– Amy
You can read more about Amy Varle’s journey in property by clicking here.
Sign Up For Our Free Course TODAY
Sign up for our free online property training course today.
In there we cover a range of different property strategies to help you get started on building a long-term property portfolio or creating a cash flowing property business.
We also look at ways to increase your return on investment with any of the properties you may be considering and we also have a couple of cheat sheets and downloadable documents.
Just click the image below to join our free training course today.
Any Questions?
If you have any questions or thoughts on tenant referencing then leave them in the comments section below.
Alternatively, you can get in touch via our Facebook page.
We’d love to hear from you and as always we’re happy to help.