How Covid-19 has shaken up tenant referencing
Covid-19’s impact on casual, hopsitality-based employment has been colossal. It’s not surprising that tenant referencing practices have had to respond accordingly.
The number of rental defaults since March 2020 hasn’t been as high as initially feared. However, more stringent criteria has been introduced for the vetting of prospective tenants.
What changes have there been to tenant referencing processes?
There’s also been a big shift towards adopting tech within the tenant referencing process. This has been compounded by agents increasingly working from home last year.
While the fundamentals of tenant referencing haven’t changed, the concerns surrounding tenants’ ability to pay have led to a stricter set of criteria.
“A lot of our new tenants had to either find a UK-based guarantor or pay a bigger proportion of initial rent upfront,” said Terry Bradbury, Senior Property Consultant at Look Property Services in East London.
“This new, tougher criteria was really difficult for many of our tenants. We found ourselves down around 70% on new lettings for the period June to September 2020. With many of our tenants working in the hospitality industry, an awful lot of them were affected in terms of employment and their ability to pay their rent.
“As a result, we had to start pre-vetting our tenants. That involved checking that they would pass the referencing checks before we even showed them around the property. We felt it best to be up front them and not waste their time or ours,” he added.
Embracing technology to support tenant referencing
Another impact of the pandemic is that agents have had to embrace tech to help get their tenants through the necessary rental checks.
For Simon Tillyer, managing director of another tech provider, Vouch, it’s been a case of landlord and tenant working together to create solutions which can work for both parties.
“The tenant referencing criteria is now stricter. However, we’ve actually found that a lot of our landlords have actually been very lenient with their tenants,” said Simon.
Pulling together in the face of a global pandemic
“There’s been a lot of collaboration in which they’ve agreed reduced payments or come to some sort of arrangement.
“We’ve encouraged our landlords to talk to their tenants and the agents have been pivotal in this, too. It’s not us and them – there’s been a real sense of us all being in this together,” he added
A combination of growing risk in the lettings market coupled with the rapid response of the proptech industry has led to a big increase in the use of digital tenant referencing services over the last 12 months.
Goodlord has seen an increase of 78% in the number of tenants being processed through its platform when comparing figures for March 2020 with those for March 2021.
What’s the future for tenant referencing?
But while proptech is booming, what impact will the pandemic have on struggling tenants’ ability to pass referencing checks in the future?
Tillyer says it’s too early to say.
“It’s really hard to know yet whether landlords will show more lenience in this area,” said Simon.
“The fact is, although things are starting to open up, we still don’t know how many people are going to lose their jobs in the longer term. There’s a long way to go yet.”
How Alto can help with tenant referencing
- Use our PropertyFile integration to talk to tenants virtually anytime, and flag up referencing issues before they cause a headache
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