How Do I Verify Tenant Income as a Landlord?

As a landlord, it can be a difficult process gathering the right documents from tenants that verify their proof of income. It is an important part of being a landlord, as you don’t want to sign a tenant contract with someone that can’t afford the rent. Pay slips are probably the best proof of income, but landlords should also collect at least one other proof of income document and compare the two to ensure no fraudulent activity is taking place.
As a private landlord, you can verify income manually by requesting certain documents that show proof of income. Alternatively, if you are renting out your property using a property management service or local estate agents, you can outsource your tenant screening process. Whichever route you decide to take as a landlord, tenants should be able to prove that they make at least three times the current monthly rent.

What Documents Can Verify Tenant Income?

Pay Slips
Primary proof of income for any W-2 employees Tax Returns
Primary proof of income for self-employed small business owners Bank Statements
Secondary documents used to corroborate pay stubs, tax returns, or Social Security benefits Letter from Employer
Secondary documentation used with W-2 employee pay stubs Profit and Loss Statement
Secondary proof of income for self-employed tenants
Some landlords gather different types of documents, such as bonuses, seasonal pay and hazard pay. However, these types of earnings usually aren’t considered legal representations of income. It is always best to use official documentation.

Top 5 Questions Estate Agents Gets Asked

It is important for both tenants and landlords to understand the letting process. Open House Estate Agents Leicester get asked many questions as on of the top rated property management companies in Leicester, the experts have put together a helpful guide to answer the top FAQ’s.

Can I Rent A Flat Without Proof Of Income?

Flats, bungalows and houses all fall under the same rule book as any other type of property, you almost always have to verify income. As a tenant, if you don’t make enough money to qualify, you will need to consider a lease guarantor. A Lease guarantor plays a similar role to a co-signer of a loan. It gives the landlord more confidence in accepting your application as it shows if you fall behind with any payments, there is someone there to cover the loss. However, it is not a good route to take, if the property is out of budget, consider downsizing or a different location.
Can I rent a house without a job?
If you are currently unemployed and looking to rent a new home, you may want to consider getting a room mate or moving in with someone until you can verify your income. It can be a difficult process signing contracts without proof of a steady income. If you have a sizable pot of savings, some landlords may consider taking you on, however it is never garmented as it becomes more risk for them.
Should I let my property to a tenant with proof of income but bad credit ratings?
A credit history is a record of a borrower’s responsible repayment of debts. A credit report is a record of the borrower’s credit history from a number of sources, including banks, credit card companies, collection agencies, and governments. Letting your property out to someone with bad credit increases the risk factors involved. There are times when extenuating circumstances occur, such as sick family member or unexpected company layoffs. It is important to understand their full story before you agree to accept them.
Should I sign a tenant with no rental history?
Landlords will always prefer to rent to tenants with a rental history, as they can provide references and increase the confidence of the landlord. However, this is not a law, it is just a preference. The best way to check this is to understand the credit history of the potential tenant, or if they have enough savings to cover at least two months of rent and provide proof of income.
Should I refer to gross income or net income?
Landlords calculate a tenant’s debt-to-income ratio using the tenant’s gross income. In most cases, landlords want to see at least three times the amount of gross income to the rent. For example, if you make £3,000 per month gross, ideally you’ll want to stay around £1,000 per month for rent.

Are you looking for an experience letting Agent?

A renter needs to prove they can afford to rent your property. If you are a landlord that doesn’t have the time or knowledge to carry out this process, you can refer to a local estate agent for support. With unrivalled experience of the Leicester lettings market, you can be assured of the best local expertise to help you achieve your property investment goals. Open House have access to a national database of prospective tenants searching for properties in your area and a strong presence on the major property portals.
As well as marketing updates and regular feedback, we offer a range of letting services at competitive prices to make life easy for you. Our services include Inventories, Gas Safety Certificates, and EPCs.

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.