Imagine having the ability to read another’s mind? Prospective tenants will never have to wonder why a rental application was refused again.
PG van der Linde, rentals manager for Seeff Pretoria East, says that a landlord has two primary considerations when deciding whether or not tenancy should be granted. These are a tenant that will pay the rental on time and someone who will look after the property as if it were their own.
Van der Linde says that people often disregard the fact that rental properties are investments; landlords will therefore be focused on limiting the risk and making a return. “Losses to a landlord include the non-payment of rental and any damages caused to a property,” he explains.
Whether managing the rental property independently or employing the services of a rental agent, van der Linde says that checking the background of the potential tenant thoroughly is of utmost importance. He elaborates by saying that his office does this by requesting a few months’ bank statements, as a rule of thumb a tenant’s gross income must be slightly higher than three times the rent. “The tenant’s cash flow must not be hampered by the deposit and first month’s rent to such a degree that the tenant is suddenly under financial pressure,” cautions van der Linde. “If these affordability prerequisites are passed the tenant’s willingness to pay the rental on time should be investigated next.”
Van der Linde believes that the second step is the most important, as a big bank balance does not always equate to a tenant who pays on time, or even at all. A tenant’s willingness to pay is established through investigation of the tenant’s payment habits like previous defaults and judgements.
When requesting a credit check from the prospective tenant a landlord can see the applicant’s arrears balance for each retail account and from which creditor. Based on this, van der Linde stresses the importance of paying all credit agreements on time to prevent a bad payment habit from forming on his or her credit background.
Equally important is the tenant’s ability to look after a property well. Rental properties must be looked after well and returned in the state in which it was first received, excluding fair wear and tear. Van der Linde reminds that damages caused by a tenant can also be listed on that tenant’s credit background as a default. Any negative history will thus be picked up by a background check.
According to van der Linde the best course of action for a tenant is to retain a spotless credit background, that way if a tenant qualifies for both affordability and willingness to pay the application should generally be successful. On the other hand, a landlord must ensure that the required checks are done before agreeing to a rental agreement. Van der Linda believes that the most effective manner to ensure the applicant is properly vetted, is to make use of a reputable rental agency.