Renting References + Self Employed?

gmarno

Hi All,

I was hoping you could offer some advice on references and renting. I'll give a quick run down of my situation first just to clear things up a bit

I'm 29 and looking to move out of my parents house (very late I know but there you are). I've been saving like mad the last few years whilst also starting my own business which is bringing in a decent wage. However, I'm a little worried that when it comes to renting I may come up against some obstacles and wanted some advice from people who have been there and done that.

First off, money isn't the issue. I have a good chunk of savings (~£35k) but I have a less than normal situation when it comes to references etc. I can afford rent of ~£900 (exc bills) but I don't really know what to do about references and the other stuff that goes into a letting application.
I've done some reading on here and it appears that references from your bank, previous landlords and employer are fairly standard. However:

I work for myself, so no employer reference is available.

I've never rented, so previous landlords are not available.

I earn sporadically throughout the year (as I'm sure many self employed people do), so this may look unusual.

Therefore my banking situation can vary from month to month, sometimes nothing comes in while I'm waiting for invoices to be paid, and the next month I'll have a chunk of money appearing.

As far as I'm aware I have a good credit score (no loans or CCJs), never been in debt and I have a few CCs that are paid off in full every month without fail. Certainly nothing to be worried about as far as I know.

Basically, I don't want to pay an application fee to an agent only for them to reject me because of my unusual situation (and then lose any potential holding fee). So, does anyone have any advice?

chickmug

How about reference from your accountant?

Personal ones OK but do you know anyone who has letters after their name types of people?

How long have you been self employed as you may well have a year or so of P&L Accounts which will be important.

So bank, accounrtant and I would accept some personal, if I know who they are, and we can talk to them on the phone.

Jowo_2

The usual methods of securing a tenancy when belonging to a group considered riskier is for the tenant to offer a guarantor or pay a greater sum of the rent in advance. Discuss your options with the letting agent or landlord.

orangeslimes

I don't think you have much to worry about. Accountants are used to filling in reference forms for self employed people in this situation. You could always offer to pay more rent up front but I think it would be ridiculous to penalize you just because you are self employed as just because someone is employed doesn't mean they won't lose their job tomorrow - in fact depending what you do it might be a sign you are more likely to be financially stable.
I suspect if you don't have a previous landlord a character reference might suffice?

NEH

Ok we're just going through this process and my husband has his own company and we had no landlord reference either as husabnd owns this place plus I have no employer reference either...

The references we provided were for myself, a family friend and my training course manager for the course I had been doing last year and for my husband his business colleague and a former boss who is now also a friend...

So my advice would be talk to your agent be honest, is their a neighbour who could vouch for you? (I did this when I rented on my own once and had been staying at my mum's previously) and a family friend? if there is then offer these to the agent. The other thing we did we got a rent reduction because we offered 3 months up front which in order to secure a place at whatever rent you could offer 3 or 6 months upfront...

We were honest with the agent and asked what would be acceptable in our position because like you we were worried we would miss out...

Is there any clients who you deal with on a regular basis that would be willing to vouch for you? A former employer perhaps?

tizhimi

I'd offer to pay 3 months up front and they can stick any references!

References don't mean very little I have found, afterall, you are ok moneywise and thats all the agencies care about, if you damage the place that comes out the "damage deposit scheme".

I think its a scam the whole landlord "vetting" but there we go, it was MY landlord that screwed us over, we didn't check his money situation out... the irony eh?

Tassotti

I'd like to reply as a Landlord (which I will)

I understand your position completely. I have accepted self-employed people before (three years ago), but I needed 1 years rent upfront.

You have already stated that some months you might not have payment (mortgage company doesn't buy that)

These days, though, I will not (cannot) accept self-employed people without a guarantor.

The reason is, as a LL I get rent-guarantee insurance (especialy in this economic climate). These insurance companies will NOT accept self-employed people.

All LLs are different, and some may take you on, so look privately in your local paper.

It will still be worth payinh them at least 6 months upfront, as if you have no income for 2 months, this will make the LL issue you an eviction notice.

Tass

gmarno

Thanks for the quick replies guys

I do my own accounts so an accountant isn't going to be an easy one to get (at least not legitimately). Unfortunately I don't really know anyone "important" with letters after their name. I can get personal references from company directors (some of my clients whom I am friendly with) which may help.

I've been self employed (actually a Ltd company) for about 3 years now, though to be honest I don't really feel comfortable with someone pawing through my company accounts. I know they're available at CH, and there's nothing to hide; I just don't like the idea of someone else scrutinising every aspect of my financial existence for a house rental I doubt the LL is going to provide copies of their bank statements etc

I have no issues putting down a larger deposit for the first 12 months (double their asking amount) or perhaps paying 3 months rent up front (no more in case the LL is in financial trouble and ends up getting reposessed). I'd prefer to avoid a guarantor (just because I don't like someone else having to put their neck on the line for me), but I'm sure my parents would act as one if it became necessary.

Obviously I won't be paying any money to any agent until I've discussed my situation with them, but I just want to get an idea of what is reasonable etc.
Keep the replies coming :beer:

Tassotti

gmarno wrote: »

I have no issues putting down a larger deposit for the first 12 months (double their asking amount) or perhaps paying 3 months rent up front (no more in case the LL is in financial trouble and ends up getting reposessed).

Good Point

Obviously I won't be paying any money to any agent until I've discussed my situation with them, but I just want to get an idea of what is reasonable etc.
Keep the replies coming :beer:

Reference charges range quite wildly...As a private LL, I charge £40 per tenant per check...Letting agents can charge up to £200 for this service (plus £50) for a guarantor check (which you may need)

gmarno

Tassotti wrote: »

It will still be worth payinh them at least 6 months upfront, as if you have no income for 2 months, this will make the LL issue you an eviction notice.
Tass

Thanks for the replies Tassotti, it's nice to get a perspective from your side of the fence. LL's are taking a big chance and I've got to say that I don't really envy them. There's simply no sure way to be sure other than taking reasonable precautions that fit most "normal" situations.

I just get a little frustrated with things like this which don't actually offer any real protection. I could quite easily "arrange" references from all kinds of "reputable" people.

I'm thinking that 3 months rent up front and an increased deposit should be enough. I don't think it's the private LL's that will be the issue, it's going to be the agencies that don't know what to do with people who don't fit their profile.

NEH

gmarno wrote: »

Thanks for the replies Tassotti, it's nice to get a perspective from your side of the fence. LL's are taking a big chance and I've got to say that I don't really envy them. There's simply no sure way to be sure other than taking reasonable precautions that fit most "normal" situations.

I just get a little frustrated with things like this which don't actually offer any real protection. I could quite easily "arrange" references from all kinds of "reputable" people.

I'm thinking that 3 months rent up front and an increased deposit should be enough. I don't think it's the private LL's that will be the issue, it's going to be the agencies that don't know what to do with people who don't fit their profile.

It does vary between agencies I woulnd't write them all off, we had one near us before we decided to move further away that charged for this that and everything else including the kitchen sink and we would have had a hard job with them satisfying all their requirements whereas with the current ones it wasn't problem...