Landords waht do you do when self employed want to rent

chickmug

From my point (LL) we have someone asking to rent but who is self employed but has sold his business and is not yet going with the next one.

We have a few years accounts, which are fine, which we would normally accept but would you guys talk to his accountant.

The accounts seem to be done a by a 'one man band' accountant, on plain paper, with accountants contact details in black only, no fancy letter heading. So could of been done by anyone on their laser printer?

Anyone come across forged accounts? Or am I getting too cycnical?

Jowo_2

The accounts that my 1 man band accountant produces aren't on the sexy side either but that's not your main problem. If its a limited company, you can verify the status of the company and download the accounts via the webcheck service of companies house.

The accounts are a non-issue, since they relate to a business that is no longer run by the prospective tenant.

All I read from your post is 'I've got a tenant who currently has no income' in which case the answer is to perform the standard tenant screening checks, including credit check, previous landlord, that you would perform for any tenant which leads you 2 a decision whether to
1/ decline them for being too risky
2/ accept the tenancy on condition of 6 months rent up front and/or guarantor.

I mean, if he's sold his successful business then he's in the money, isn't he?

wheresmydoshat

yeah definately ask for 6 months up front, in which time he would hopefully be up and running with his next business.

tbs624

Jowo wrote: »

The accounts that my 1 man band accountant produces aren't on the sexy side either but that's not your main problem. If its a limited company, you can verify the status of the company and download the accounts via the webcheck service of companies house.

The accounts are a non-issue, since they relate to a business that is no longer run by the prospective tenant.

So why suggest checking to see if they are available via Cos.House? I hold a different view to Jowo on the business a/c's - they *can* give a useful indication of how someone conducts themselves financially.

Jowo wrote: »

All I read from your post is 'I've got a tenant who currently has no income' in which case the answer is to perform the standard tenant screening checks, including credit check, previous landlord, that you would perform for any tenant which leads you 2 a decision whether to
1/ decline them for being too risky
2/ accept the tenancy on condition of 6 months rent up front and/or guarantor...

.....and maybe something in blood as well? If you have six months rent up front , plus a tenancy deposit and you are only signing the T up for an initial FT of 6 months why do you think its acceptable to ask for a guarantor as well?

Let's assume Chickmug is a fine upstanding chap but we know that some LLs aren't - maybe a T chucking 6 months rent upfront to a LL whose own financial situation is unknown to him/her may want the LL to have a guarantor, in case the LL defaults on the mortgage & does a runner with both the remaining advance rent & the tenancy deposit, leaving a repossessed property and the T with no roof over his/her head.

Chickmug , I'd go with a comprehensive credit referencing plus personal/business/bank references, and maybe 3 months rent upfront OR a personal guarantor.

On LL references, I'd never rely solely on the previous/current LL's say so -s/he may be really pleased to be getting the T out and give a reference that will speed that up, so go a bit further back if necessary.

Jowo_2

tbs624 wrote: »

So why suggest checking to see if they are available via Cos.House? I hold a different view to Jowo on the business a/c's - they *can* give a useful indication of how someone conducts themselves financially.
.

It is pointless to wave around the accounts of a company which is no longer owned by the tenant, isn't it? It indicates that when they ran the company that they had an income but now shows that they no longer have one!

Would you accept a tenant with no discernible income who showed you his bank statements and payslips from when he last worked on the basis that past performance demonstrates future performance?

Self-employed tenants face a considerable nightmare getting state benefits. So if the tenant doesn't have any income and may struggle to get LHA, then they need to have considerable savings in which to pay the rent, don't they? Otherwise they've left themselves vulnerable to having no income in which to support themselves or pay the rent, despite their historic entrepreneurship.

clutton_2

i would need a guarantor in this scenario

franklee

As a tenant: I do my accounts on my laser printer One man bands are pretty common.

Normally I offer six months rent up front and this has not been refused but I offer this at the viewing stage. I would think twice about it now in case the LL goes under so would consider offering six months to be held at the LL's solicitor and released to the LL monthly. I'd defo want proof of consent to let from the LL's lender. Also I may pay a slightly bigger deposit if it's in the custodial scheme.

If I was asked for a guarantor I'd laugh, I'm an old fart now and daddy has long been dead.

silvercar

You don't have a guarantor, the landlord may not have a solicitor. Certainly not one he would have to pay a retainer to look after your rent money.

chickmug

I have just heard the problem has resolved itself in the last hour. The chap realised that he was being put under the microscope and he is bright enough to understand the position.

So now his parents have come forward as guarantors and from first look are rather well off asset and income even in retirement.

So thank you all for helping and usually I leave this side (managing the properties) to one of my family but he asked me, on this one, as I am more used to seeing acounts with my business back ground.

I think I will keep out of it from now on:beer:

theartfullodger

Re...

We have a few years accounts, which are fine, which we would normally accept but would you guys talk to his accountant.

I'd always suggest with this situation that a simple copy of the last 3 tax returns will be fine: If he looks uncomfortable with the suggestion you know he was on the fiddle and can therefore not be trusted.


Anyone who is happy lying to the tax man ain't exactly gonna be worried about misleading a bleedin' money-grabbing Landlord

Cheers!

Lodger (A landlord since 2000)

tbs624

Jowo wrote: »

It is pointless to wave around the accounts of a company which is no longer owned by the tenant, isn't it? It indicates that when they ran the company that they had an income but now shows that they no longer have one!

It's no more pointless than a LL asking for three-six months bank statements - those show that the T was paid for that period, not that their employer will be paying them for the six month duration of your shiny new AST.

Jowo wrote: »

Would you accept a tenant with no discernible income who showed you his bank statements and payslips from when he last worked on the basis that past performance demonstrates future performance?

Let's follow your line of thought through: standard credit checks indicate that the T hasn't got any CCJs or other defaults to date, so you would presumably rely on that past performance as part of your judgement?

Jowo wrote: »

Self-employed tenants face a considerable nightmare getting state benefits.

Yep, most of us know that Jowo.

Jowo wrote: »

So if the tenant doesn't have any income and may struggle to get LHA, then they need to have considerable savings in which to pay the rent, don't they? Otherwise they've left themselves vulnerable to having no income in which to support themselves or pay the rent, despite their historic entrepreneurship.

Has anyone suggested that a tenant could be solely assessed on their "historic entrepreneurship"?

Experienced LLs use a combination of factors to assess what they see as an acceptable risk level before signing a T up.