Self employment - potential tenant

Pennylane

Our tenants have left after 10 years so I am back to square one. Obviously seeking the best tenant we can find. Had loads of interest but a lot of timewasters or not suitable.  One person really wants the property but is self employed.  I am a bit wary of taking on a self employed person although I do feel some sympathy as my OH has been self employed most of his working life but has always had a very healthy bank balance and no debts.  

What evidence do I need that they could afford it?  With the last people I got a reference and did a credit check but they were retired and had regular pensions coming in.    Thanks.

[Deleted User]

Ask to see his bank statements.  Some would regard this as an invasion of privacy but as they want to rent your property its up to you what you ask to see. I'd also check their social media history - can give an indication of lifestyle. Credit checks don't always give enough as they will only show what's publicly available like CCJ's.  Someone can have a lot of debts but no CCJ's.  References can be written by a LL only too glad to get rid of a tenant.  

Grumpy_chap

What about taking rent protection insurance?
Not because you want to protect yourself in the event of non-payment but because, if the insurer will insure then you know they are a good bet and the insurer does all the finance / probity checks for you.
Pay the premium for year one and, if all OK at that point, no need to renew the policy to cover future.

numbercruncher8

Bit of a generalisation if you don't dig deeper.

You can be employed but with debt and live month to month and unable to afford an unexpected expense. A self-employed person could have a really solid financial backing.

At the very top level you could ask what their business is, you may be able to make a judge whether it is something that is sustainable or not, or how long it has been trading.

You could also request their tax returns, or if they are a limited company you can access their filing history online. These may not tell the full picture, but they may give further clues.

You could also ask for a bigger deposit to compensate.

AdrianC

Pennylane said:

Our tenants have left after 10 years so I am back to square one. Obviously seeking the best tenant we can find. Had loads of interest but a lot of timewasters or not suitable.  One person really wants the property but is self employed.  I am a bit wary of taking on a self employed person although I do feel some sympathy as my OH has been self employed most of his working life but has always had a very healthy bank balance and no debts.  

What evidence do I need that they could afford it?  With the last people I got a reference and did a credit check but they were retired and had regular pensions coming in.

Somebody employed could lose their job tomorrow.
Ask for a year or two's accounts for their business. Unless they're totally shonky, they'll be used to it.

Pennylane

deannatrois said:

Ask to see his bank statements.  Some would regard this as an invasion of privacy but as they want to rent your property its up to you what you ask to see. I'd also check their social media history - can give an indication of lifestyle. Credit checks don't always give enough as they will only show what's publicly available like CCJ's.  Someone can have a lot of debts but no CCJ's.  References can be written by a LL only too glad to get rid of a tenant.  

thanks. Nothing on social media, have checked. I feel a bit awkward about asking for bank statements although I probably shouldn’t.  

Pennylane

AdrianC said:

Pennylane said:

Our tenants have left after 10 years so I am back to square one. Obviously seeking the best tenant we can find. Had loads of interest but a lot of timewasters or not suitable.  One person really wants the property but is self employed.  I am a bit wary of taking on a self employed person although I do feel some sympathy as my OH has been self employed most of his working life but has always had a very healthy bank balance and no debts.  

What evidence do I need that they could afford it?  With the last people I got a reference and did a credit check but they were retired and had regular pensions coming in.

Somebody employed could lose their job tomorrow.
Ask for a year or two's accounts for their business. Unless they're totally shonky, they'll be used to it.

I know you’re right.  In these times nobody is really safe.  thanks.

Pennylane

numbercruncher8 said:

Bit of a generalisation if you don't dig deeper.

You can be employed but with debt and live month to month and unable to afford an unexpected expense. A self-employed person could have a really solid financial backing.

At the very top level you could ask what their business is, you may be able to make a judge whether it is something that is sustainable or not, or how long it has been trading.

You could also request their tax returns, or if they are a limited company you can access their filing history online. These may not tell the full picture, but they may give further clues.

You could also ask for a bigger deposit to compensate.

numbercruncher8 said:

Bit of a generalisation if you don't dig deeper.

You can be employed but with debt and live month to month and unable to afford an unexpected expense. A self-employed person could have a really solid financial backing.

At the very top level you could ask what their business is, you may be able to make a judge whether it is something that is sustainable or not, or how long it has been trading.

You could also request their tax returns, or if they are a limited company you can access their filing history online. These may not tell the full picture, but they may give further clues.

You could also ask for a bigger deposit to compensate.

I think I will ask for tax return info.  Thanks very much.

Pennylane

Grumpy_chap said:

What about taking rent protection insurance?
Not because you want to protect yourself in the event of non-payment but because, if the insurer will insure then you know they are a good bet and the insurer does all the finance / probity checks for you.
Pay the premium for year one and, if all OK at that point, no need to renew the policy to cover future.

Thank you.  Worth considering.

Grumpy_chap

Are you using a Letting Agent, or managing yourself?  If you use a LA, they can use credit reference agencies to assess the risk of an individual.

theartfullodger

Ask for copies of last 3 tax returns.  Will tell you if he's a liar....