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Tenant referencing could become increasingly important in 2012, says ARLA

20th December 2011

Landlords could find that there is an even greater need to carry out thorough tenant referencing in 2012.

According to the Association of Residential Letting Agents (ARLA), with rents rising and the economy struggling, next year could see increasing pressure put on tenants' finances, which in turn could make it more likely they will fall into arrears with their rent.

As such, the organisation is urging landlords to make sure they carry out full tenant referencing before going ahead with a let, as this will give them a better indication of the prospective tenant's ability to meet rental payments.

Tenant referencing could also reveal details of a prospective occupant's rental history, such as whether or not they have ever caused any damage to a property, which could in turn help landlords avoid having to make a claim on their contents insurance cover.

"Creeping unemployment may have an impact on the financial stability of both tenants and landlords, which in turn may spark a rise in rental and mortgage arrears, and even repossessions," said Ian Potter, operations manager at ARLA.

"While it is impossible to know whether someone will be solvent in the future, it is important to carry out relevant checks on a potential landlord or tenant, to look for signs of financial instability. We would always recommend that consumers rent or let a property via a licensed lettings agent, who will be able to carry out checks on their behalf."

Meanwhile, 2012 is also likely to see a continuation of the rising tenant demand which has helped push up average rents across the UK in recent months.

A recent survey of ARLA members found that 74 per cent already report that there are more tenants than available properties and "this is a story we're likely to see worsen", according to Mr Potter.

"However, there is some anecdotal evidence in parts of the country that stock levels of rental property could be increasing," he added.