In these uncertain times, stability and security have become more important than ever – and the concept of pre-approved tenants fits this bill perfectly.
As an agent, if you can fill your landlords’ properties with good, reliable tenants – who will pay their rent on time, treat the home like it’s their own and cause next to no issues – they will feel far more confident in their ability to achieve strong rental yields over time and a good return on their investment. This, in turn, may encourage them to expand their portfolio, potentially giving you further homes/tenants to manage on their behalf.
Below, we outline some of the reasons why pre-approved renters are more crucial than ever.
Preventing void periods and rent arrears
One of the biggest advantages of referencing and approving tenants before they move into a rental home is reducing the likelihood of costly void periods – where a landlord’s property is vacant but still costing them considerable sums of money to run – and rent arrears, as checks beforehand can give an insight into a tenant’s reliability, financial history and previous renting experiences.
If you know you have tenants in place with good credit ratings and credit histories, as well as a history of paying their rent on time, you and your landlords can feel reassured that this will continue to be the case moving forward.
Simple, automated and instant referencing – of the like offered by Canopy, for example – can provide transparency and ensure the right kind of renters are occupying the homes belonging to your landlords. This includes credit checks, landlord and employer referencing and rent affordability checks through Open Banking to ensure a tenant’s credentials add up before you let a home to them.
It was recently revealed that Universal Credit (UC) tenants are being forced into rent arrears by the controversial new all-in-one benefits system, with the Residential Landlords Association (RLA) reporting that 54% of private landlords who have let to tenants on UC in the past year have seen them fall into rent arrears.
Of these, some 82% said that the arrears only started after a new claim for UC or after a tenant had been moved to UC from housing benefit instead, while 68% of landlords said that there was a deficit between the cost of rent and the amount paid in Universal Credit.
Rent arrears can be a problem for any kind of tenant, at any time, but pre-approving tenants could help to mitigate the chances of them occurring – or at least allow for processes and contingency plans to be in place to cope with them.
While void periods, on the other hand, are falling across every UK region, it’s never wise to be complacent – and here a pool of pre-approved tenants can help to ensure the time it takes to let a property is much reduced.
Coping with a Section 21-free world
With speculation persisting that Section 21 eviction notices will be scrapped entirely, potentially making it much more difficult for landlords to regain possession of their properties through the courts, the importance of pre-approved tenants is once again highlighted.
The chances of rogue or misbehaving tenants are low if they have been referenced and pre-approved beforehand, allowing you to build a picture of what kind of renters they are before letting them anywhere near your landlords’ rental properties.
Even at present, before Section 21 has been scrapped, the Ministry of Justice recently said it takes private landlords an average of 22.5 weeks from making a repossession claim in the courts to it actually happening, up from 21.6 weeks since the beginning of the year. The RLA believes this shows the current system is unfit for purpose, arguing that the courts are unable to cope when landlords seek to repossess properties for legitimate reasons.
If and when Section 21 is scrapped, landlords could find it even trickier to evict or regain possession of their properties for other reasons, which is why getting the right tenants in the first place – one who landlords will have no reason to evict – is so vital.
In a world where evicting troublesome tenants becomes harder, excellent pre-approved tenants become worth their weight in gold.
Saving time, money and hassle
Pre-approved, ready to rent tenants can also help to save you time and money, by allowing you to focus on other things and tasks – growing the number of properties you manage on behalf of landlords and growing your business as well.
At Canopy, we pre-approve tenants in the following way. Prospective tenants complete their Canopy RentPassport – which is effectively a digital rental profile which means tenants can reference themselves either before or after a viewing a property to ensure they are suitable.
Approving applicants is then a breeze, with a 60 second screening through the Canopy app and comprehensive screening from landlord and employee referencing to affordability checks through Open Banking.
After this, you get a verified tenant, ready to rent – which saves you the time, hassle and cost of vetting and referencing tenants yourself.