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Tenant Screening - Using a Management Agent
Inexperienced landlords, those who live more than a short distance away from their property, or properties, or those who simply cannot, or do not want to, involve themselves in property management on a everyday basis, may find that a property management agent, or company, is a viable alternative. A member of the Association of Residential Letting Agents (ARLA) may, obviously for a fee, deal with starting up a tenancy, and screen prospective tenants on your behalf. Some may also collect rent, and provide a comprehensive property management service, so that you need have no "hands on" dealings with the property, or its tenants, if that is what you desire.
A property management agent can advise you on aspects of your property before you let it out to tenants. An agent is likely to be used to viewing properties of many shapes and sizes, and in various conditions, with a critical, objective eye. He, or she, may therefore be better placed to advise you on the standard that your property should attain in order to attract high quality tenants, and, of course, achieve the highest rental income possible. An agent should also be acutely aware of the state of the market, at any time, and can advise you on the maximum rent realistically achievable on any given property.
The prospect of finding, and interviewing, tenants can be a daunting one for a new, or inexperienced, landlords. There is, of course, the need to make it known that your property is available for rental, and, even when you have found a prospective tenant, or tenants, formulating – and remembering to ask – the right, prejudice free, questions can be equally arduous. Property management agents, of course, often have years of experience in these situations, and usually have all the correct questions off pat.
Similarly, a property management agent will usually take on the responsibility of dealing with initial financial transactions, such as the payment of a "bond", or deposit, and any advance rent payable at the start of a tenancy. This can often provide peace of mind when it comes to dealing with cheques, bankers' drafts or foreign transactions, and the additional "clearing" times associated with them.
A property management agent can act as an independent, and largely impartial, "go between" for you, and your tenants, in cases of late payment or non payment of rent, or in other disputes. Late rent, for example, can often be left at the offices of an agent, for collection by the landlord.
On the downside, of course, a management agent will normally be responsible for setting the rental price for your property. An agent should, however, be familiar with market rates for the location, and condition, of a property, and it is, after all, in his, or her, best interests to obtain the highest rent possible. You are also likely to be removed from the process of tenant screening, so the selection of your tenants will depend on the judgement of your agent. Again, this is unlikely to cause any problems, because no scrupulous agent is likely to knowingly select an unreliable, or confrontational, tenant on your behalf.
Screening Tenants - Some General Guidelines
If you employ a property management agent to screen tenants on your behalf, he, or she, will ask prospective tenants to fill out an application form, and there is no reason why you should not do likewise. The application form should include a National Insurance number, previous addresses for the last three years, at least, and details of next of kin, to be contacted in the unlikely event of the abandonment of the property.
When interviewing prospective tenants focus your questions on their financial and employment histories, how long they have been at their current address, why they are leaving, etc. These are all facts that you, as a prospective landlord, are entitled to know. Avoid, however, questions that are related to race, religion, sex or age, or any other factor that could be considered discriminatory.
You should ask for references, from a previous landlord, and an employer, and follow these up with the individuals concerned, if necessary. You should ask a tenant for his, or her, permission to do this. Similarly, for your own peace of mind, you may also like to run a credit check on a prospective client, to establish that he, or she, has a history of managing debt responsibly, and paying bills on time. Such searches will involve contacting one of the major credit reference agencies, such as Experian, but you should, once again, obtain permission from your tenant before doing so.
Deposits
A deposit, or "bond", is a sum of money – often, but not always, equivalent to one month's rent – that is paid by a tenant to a landlord at the start of a tenancy. This sum is intended to be used to rectify any damage to a property, or its contents, during the tenancy. It is important to note that the deposit remains the property of the tenant at all times during the tenancy. Two types of scheme, known as "custodial" and "insured" exist, for the settlement of disputes between landlords and tenants over the repayment of deposits. A landlord either pays the entire sum into a designated account, or pays an initial premium, and holds the deposit himself, or herself. In the event of a dispute, resolution procedures are in place to decide how much of an original deposit should be returned to a tenant.
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