Understanding the importance of the Tenant screening process

Understanding the importance of the Tenant screening process

UNDERSTANDING THE IMPORTANCE OF THE TENANT SCREENING PROCESS

According to the most recent Tenant Profile Network (TPN) Rental Monitor report, “Since around 2014, we have witnessed a gradual deterioration in tenant payment performance nationally. The percentage of tenants 'in good standing' with their landlords reached a multi-year peak of 85.95% in the third quarter of 2014. Since then, this percentage has declined by just over three percentage points to 82.77% by the first quarter of 2017.”

It is particularly important for landlords (using this report as an indicator of trends) to screen their tenants properly while they are in the application phase for a property, so that there is a reduced chance of a lack of payment or a breach of the contract in some way, says Sunell Afrika, rentals manager for property company SAProperty.com.

Tenants might not understand why their application could take some time to approve, but there are certain items that need to be “ticked off a list” before any rental agent or landlord could consider signing a lease with a particular prospective tenant. Tenants need to understand that “harassing” the agent for an outcome is not going to quicken the process. It is, therefore, important for prospective tenants not to leave the application process for the last minute and put strain on themselves as well as the agent for a fast outcome, says Afrika.

Detailed application

When a tenant applies to rent a property, he will be asked to complete a detailed application form and include a copy of his ID or passport, three to six months' bank statements, proof of income and references from previous landlords. In addition to this, the letting agent will conduct a credit check with the relevant credit bureaux. 

The rental agent will then check that all the information provided “ties up”, such as whether:

• the prospective tenant's income is high enough, 
• the salary statement matches the bank statement, 
• credit record is clear, and 
• he/she pays his bills on time each month. 

A good rental agent will also, when interviewing the applicant, be able to assess whether their “gut feel” says this tenant seems like a good tenant or a bad one. While it is the landlord’s choice who he will sign the lease with, their agent will be able to provide guidance in making a good decision and it is important for the landlord to seriously consider these guidelines to eliminate bad tenants as far as possible, says Afrika. 

PIE Act and the CPA

The one thing to remember is that choosing the right tenant is preferred over placing someone quickly in the property, as bad choices could lead to loss of income later. It is sometimes best to wait, even if the unit is empty for a month, to find the tenant who will look after the property as if it was their own, and be able to easily afford the rental payments each month as opposed to just placing a tenant to fill a vacancy, who will later refuse to leave the property when given notice for non-payments which ultimately leads to a very costly eviction. 

With the Prevention of Illegal Eviction Act and the Consumer Protection Act in place, it is important that the right choices be made before a contract is signed, as getting rid of a bad tenant later is lengthy and costly. 

“Although the tenant screening process is not a guarantee that nothing will go wrong, it does help in placing a tenant who might prove to be an asset by paying his rent on time and in full each month and who wants to keep his lease in place for a long time to come,” says Afrika.