Partner Article

Rent defaults to show in credit history

Landlords and letting agents are welcoming Experian’s announcement that it will launch a new service giving the opportunity to check potential tenants’ rent paying history.

The credit reference agency estimates it will take 12 months to sign up a significant number of lettings agents and landlords and for the Rental Exchange service to go live.

KIS Lettings managing director, Ajay Jagota, is sceptical of how beneficial the service will be.

He said: “While this new service will allow agents and landlords to make a more informed decision before signing a contract with a new tenant, there’s still no guarantee that the tenant will pay their rent.

“In today’s tough economic conditions, there’s every possibility that a tenant may have a fantastic payment history but job losses and other financial pressures may lead to a sudden inability to pay their rent.

“The Experian product is great for weeding out bad payers, but the reality of the situation is that there is still a risk factor in taking on a new, unknown tenant.

“At KIS we understand that no one wants to take a chance where money is concerned, especially in the current climate, which is why we will only take a tenant who can bring with them a guarantor.”

KIS Lettings guarantor scheme means that the tenant does not pay a deposit, instead they have a guarantor, normally a family member or close friend, who will act as an insurance and accept liabilities on behalf of the tenant.

The guarantor scheme has proven so secure that is has the backing of landlord insurance specialists, Prestige Insurance.

Ajay added: “The new service is certainly welcomed by the lettings industry as it will provide a much-needed consequence for those renters who continually fail to pay and move from one property to the next.

“At present failure to pay rent results in no lasting effect for the tenant as they can simply move on to a new tenancy elsewhere. However, when a default on a rent payment will have a long-term impact, tenants will be much more likely to pay on time every month.”

This was posted in Bdaily's Members' News section by Ajay Jagota .