Tenant vetting is a crucial part of the pre-tenancy process, helping landlords to identify the best renters for their properties.
The vast majority of renters will have to pass some sort of referencing check to rent a property, meaning it has become an industry-standard service offered by letting agents.
As an agent, you need to have a comprehensive referencing process in place to make sure landlords' investments are protected. At the same time, there is an increasing appetite for the referencing process to be swift and seamless.
Letting agents that don't offer an efficient and competitive referencing service run the risk of delaying new tenancies, putting off tenants and risking landlord retention with a below-par service.
Like many parts of the lettings process, tenant screening has benefited from the growth and increased adoption of PropTech.
Traditional referencing can be slow and cumbersome
Most agents use a third-party supplier to carry out their referencing, although it can be done in-house.
The traditional process involves speaking to previous landlords, running a credit check, confirming the tenant's income and, since 2016, the mandatory requirement of confirming the tenant has the Right to Rent in the UK.
Gathering all this information is of course crucial in order to determine if a tenant is suitable for a landlord's property. However, the traditional way of obtaining and collating this information is time-consuming and clunky.
For many years, it has involved tenants providing photocopies of bank statements and payslips and having to visit an agent's branch to confirm their Right to Rent. More recently, online copies of key documents have been more common, but the process can still be slow.
As you'll be aware, the majority of modern renters are keen to carry out as many parts of the tenancy process as possible from their smartphones.
By requiring them to undertake a lengthy and admin-heavy referencing process, you could put them off a property. In an extremely fast-moving rental market, any delay could mean a transaction falls through as a tenant looks elsewhere.
Therefore, slow referencing can hinder agents' chances of letting landlords' properties quickly and efficiently, which could be bad for business in the long run.
How is technology speeding up the referencing process?
Thankfully for agents, PropTech is helping to make the referencing process more efficient. Tenants who create a Canopy Rent Passport can fill in all their details within 10-15 minutes and then share them with their letting agent or landlord.
Not only is this a much quicker initial process for the tenant, having a Rent Passport means they can share the details with landlords/agents every time they move rather than having to start from scratch.
Instant screening with Rent Passports means no more paper IDs, payslips and photocopies, speeding up the process for all parties and meeting tenants' need to instigate their move from their phone.
Our references include an address history and financial summary, alongside a record of income, employment reference and rental payment history. You can download a sample reference here.
A tenant's Rent Passport will also require them to fill out a landlord reference and a range of rental preferences, such as whether they smoke, keep pets or require furniture. Receiving this information instantly online helps agents to make a quick decision on whether a tenant is suitable while also significantly reducing administrative pressures at the same time.
Using Experian and Open Banking, tenants creating Rent Passports are matched to their credit profiles and their address history is verified. You are also provided with an indication of whether the tenant's credit history makes them low or high risk.
There are many benefits to this type of referencing for agents, landlords and tenants while it also helps to keep the rental market moving. Tenants can move home quicker, which means landlord's void periods are shorter and, ultimately, agents can receive their fees sooner.
Why is comprehensive screening vital post-Covid-19?
The impact of the Covid-19 pandemic on people's finances means that moving forward, letting to suitable tenants will be more important than ever.
The uncertainty of the last few months is likely to continue for the foreseeable future and therefore agents need to do all they can to ensure their landlords' properties are occupied by reliable and trustworthy tenants.
With the government's furlough scheme finishing at the end of October, there is a heightened chance of redundancies and unemployment. Consequently, it's crucial that landlords have a wealth of information at their fingertips so they can make informed decisions about prospective renters.
A comprehensive and efficient screening process can provide landlords with the peace of mind that their investment is protected. This, in turn, can boost confidence in the rental market and encourage landlords to keep investing in buy-to-let.
As for renters - the majority of whom have strived to pay their rent in full throughout the pandemic - comprehensive referencing provides them with the opportunity to share their rental record and make themselves stand out as reliable tenants.